What type of loan is an FHA-insured loan an example of?

An FHA-insured loan is classified as government financing because it is backed by the Federal Housing Administration (FHA), which is a part of the U.S. Department of Housing and Urban Development (HUD). This backing protects lenders against losses in case of borrower default, thereby encouraging them to offer loans with lower down payment requirements and more lenient credit standards. This government involvement helps increase access to homeownership, particularly for first-time buyers or those with lower to moderate incomes. By securing these loans, the FHA reduces the risk to lenders, allowing them to provide financing to a broader range of borrowers compared to conventional loans, which are typically not insured or guaranteed by any government entity.