FHA loans are insured by the Federal Housing Administration, which lets lenders offer more lenient qualifying terms — down payments as low as 3.5% and more flexibility on credit history — in exchange for the borrower paying mortgage insurance premiums (both upfront and monthly).
FHA loans are limited to owner-occupied properties (1-4 units, if you live in one unit) — they can't be used to finance a pure rental investment property you won't live in. They're a common path for first-time buyers with a smaller down payment saved up.