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Many people hear the term "FHA loan," and incorrectly assume the Federal Housing Administration is a mortgage lender. That is not the case. Established in 1934, the FHA helps lower-income, first-time home buyers get approved for a home loan by providing private lenders with mortgage insurance. This gives the lender the security of knowing the loan will be honored if the buyer defaults on the loan and allows buyers who might not otherwise qualify for a conventional loan get approved. FHA loans are available to individuals with less than perfect credit and often require a smaller down payment (usually at least 3%) than conventional loans. FHA loan limits vary throughout the country depending on the guidelines that apply to the particular market. The FHA and lender will require a real estate appraisal as a routine part of the mortgage application process. For more information on FHA loan insurance, visit the U.S. Dept. of Housing and Urban Development's Web site and search for the guide "100 Questions and Answers About Buying a New Home."