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Federal Housing Administration (FHA) mortgage loans are designed to help make homeownership more accessible for a wider range of borrowers, particularly those who might not qualify for conventional loans due to a low credit score, lack of down payment, or other factors. Here's what you need to know about FHA loans.

First, it's important to understand what the FHA is and why it was created. The FHA was established in 1934 as part of the National Housing Act, in response to the housing crisis and Great Depression. The agency's mission is to "help improve housing standards and conditions, provide an adequate home financing system through insurance of mortgage loans, and to stabilize the mortgage market."

One of the ways the FHA accomplishes this mission is by offering mortgage insurance to lenders who make FHA loans. This insurance protects the lender in case the borrower defaults on the loan, and makes it easier for lenders to offer loans with more favorable terms and lower interest rates than they might otherwise be able to.

One of the main advantages of FHA loans is that they are more accessible to borrowers with lower credit scores than conventional loans. While most conventional loans require a credit score of at least 620, FHA loans may be available to borrowers with scores as low as 500 (although borrowers with scores between 500 and 579 will typically need to put down a larger down payment).

Another thing to keep in mind is that FHA loans require both an upfront mortgage insurance premium (MIP) and an annual MIP. This is because the FHA is taking on more risk by insuring loans to borrowers who might not qualify for conventional loans. The upfront MIP is typically 1.75% of the loan amount, and can be paid at closing or added to the loan balance. The annual MIP is typically around 0.55% of the loan amount, and is paid as part of the borrower's monthly mortgage payment. 

While the MIPs can add to the cost of an FHA loan, they can also make it possible for borrowers to qualify for a loan with a lower down payment than they might otherwise be able to, and with more favorable terms than they might be able to get with a conventional loan.

In summary, FHA loans can be a great option for borrowers with lower credit scores or who don't have a large down payment. By offering mortgage insurance to lenders, the FHA makes it easier for borrowers to qualify for loans with more favorable terms than they might otherwise be able to get. If you're considering an FHA loan, be sure to work with a knowledgeable lender who can help you understand the costs and benefits of this type of loan.