What type of loans require a small down payment and are insured by the government?

FHA loans are specifically designed to facilitate homeownership for individuals who might not have the financial means to make a large down payment. They are insured by the Federal Housing Administration, allowing lenders to offer loans with lower down payment requirements, often as low as 3.5%. This government backing helps borrowers who may have lower credit scores or limited savings to obtain mortgages and purchase homes, making them a popular choice for first-time homebuyers.

In contrast, conventional loans typically require larger down payments and do not offer government insurance; they rely solely on the borrower's creditworthiness. Personal loans are unsecured loans used for various purposes, not necessarily tied to real estate, meaning they do not have specific down payment requirements. Subprime loans target borrowers with lower credit ratings but can come with higher interest rates and less favorable terms, rather than the structured support that FHA loans provide.