The notion of buying your first home for you and your family is inevitably exciting. But you have to understand that with all the excitement, you still have to remember that this still comes with responsible decision-making – and more importantly, a lot of budgeting. In fact, rarely would you find a first-time homeowner who can dish out hard cash when purchasing a house. Most of the time, this would be done through mortgages – FHA mortgages, to be exact.

But what exactly is this FHA mortgage? The thing that makes this type of mortgage very attractive is the fact that your down payment can be very low – even as low as just 3% of the whole mortgage. And the only stipulation that comes with this type is that you can only have one FHA mortgage at a single time.

So, how does this work? The Federal Housing Administration, or the FHA, was conceptualized and developed by the US government, for the sole purpose of improving housing conditions for Americans all over the state. The FHA does not really lend any money. What it does is that it insures that the complete mortgage will still be paid even if the buyer choose to commit the unfortunate act of defaulting. The decision to lend out the money still lies in the hands of private lenders – the bank, savings and loan institutions, or the credit union. The great thing about this program is that not more than 3 to 5% down payment is required. There are certain points associated with the mortgages and these are then paid to the lenders, so that the interest rates of the mortgages can be lowered.

The borrowers, however, have to pay what is known as private mortgage insurance or PMI on their mortgages. This amount ensures that the total mortgage will still be paid off in case the buyer defaults. For the most part, the PMI will be implemented only when 20% of the whole mortgage amount has already been paid.

To qualify for this mortgage, your credit history should be decent – which means your report should show you as capable and fit to pay off debts in a very timely manner. Apart from that, you should also have financial records showing that your monthly mortgage payment is not more than 29% of your monthly income.

These are just the fundamentals you need to know about FHA mortgages. By being informed about such fundamentals, you can certainly better your chances of qualifying for this type of mortgage.