An FHA home loan is a special type of mortgage that's insured by the Federal Housing Administration, or FHA. It's designed to help borrowers purchase a home with a lower down payment or lower credit score than typically required.

First, only FHA-approved lenders can offer this type of loan. Next, if you get an FHA home loan, you'll be required to purchase FHA mortgage insurance. This means you'll pay an upfront cost of 1.75% of the loan amount, as well as monthly mortgage insurance premiums, or MIP. Depending on the terms of your loan, you may be making these payments for 11 years or for the life of the loan.

To qualify for an FHA home loan, you'll need a down payment of 3.5% and a credit score of 620 or higher. The FHA gives lenders specific guidelines to determine eligibility, and your lender can help you understand how they apply to you. For example, you'll need to show a steady employment history for the past 2 years to qualify for an FHA home loan.

No. Although FHA home loans are primarily used by first-time homebuyers, it's not a requirement of the program. In fact, you can qualify for this type of loan even if you've gone through a foreclosure, as long as you wait the required amount of time and can demonstrate good credit. The main thing to remember is that you can't purchase a vacation home or rental property with an FHA loan—rather, the house must be your primary residence.