FHA home loans are mortgages that are insured by the United States government, more particularly the Federal Housing Administration. FHA in itself does not make the loans. What they do is that they insure the loans that were in turn, given out by their qualified group of commercial lenders.

With the introduction of the FHA home loan, a lot of low-income Americans were able to secure a loan to purchase their homes. FHA home loans are conceptualized in 1930's during the time of the Great Depression. The government acted to subsidize loaning programs through FHA in response to the growing rate of defaults and foreclosures.

The good news is that FHA is for every American. But they have to follow the set guidelines in applying for it. To know if you qualify for an FHA home loan, here is a checklist that you can use. See for yourself if you can take advantage of FHA's easy mortgage loan plans.

1. First and foremost, you should have a steady employment history. By this, you should be able to prove to the agency that you have at least two years of service with your current employer. Stability of job and income is the main factor. That's the primary requirement of FHA.

Home Loan Basics

When you go to apply for a home loan, you need to understand the terminology. Let's start with the most basic of terms.

1. Principal   The principal is simply the amount you borrow to move into the home of your desires. If you apply for a loan of $250,000, the amount the bank actually gives you is the principal amount.

2. Interest   Every home loan comes with an interest rate. The interest rate is the amount a lender is charging you to borrow the principal. Interest rates are typically the key to a loan as there are a wide variety of loans that have flexible interest rates that change every year, ever few years or simply remain set over time. In general, you want to minimize the interest rate as much as possible.

3. Term   The term of the loan is simply the number of months you have to repay the money you've borrowed from the lender. For instance, a 30-year fixed rate mortgage is indicative of a term of 360 monthly payments to be made over 30 years. Don't worry, there are loans of much shorter periods of time.

Getting a 30 year home loan used to be a popular choice among most home owners. The reason being the total home loan payment is being spread out across a longer time period so you can pay less each month. Plus with interest rates fixed for the 30-year period, it seems a good deal. Or is it?

The one big benefit of a 30-year home loan is that you pay lower monthly payments however, you need to take into consideration that you actually pay more in interest than someone who has a 10-year home loan. So the longer the home loan period, the more you actually pay.

To illustrate the difference the home loan period makes, here is an example. Let's say for a 30-year home loan, the interest rate is 7%. The home loan is $100,000. That's means your monthly payment is about $665.00. It also means the interest paid for the 30 years is around $140,000. Now suppose for a 15-year home loan with the same interest and total home loan amount. The monthly payment is around $870.00 and the total interest over 15 years is around $56,800.

So by opting for the 15-year home loan, you actually save $83,200 in total.