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For many years, homebuyers seized upon the option to purchase their first house with a loan backed up by the Federal Housing Administration (FHA).

This allowed them to put down as little as 3.5% of the total cost upfront, which meant owning a home was an achievable prospect even if your credit wasn’t perfect. An FHA loan traditionally offered a great way to eliminate money stress.

However, fewer first-time homebuyers are opting for this kind of loan today, eschewing it instead for a conventional mortgage. Here are some reasons why.

1. The history of FHA loans

To understand what FHA loans are and where they came from, you have to go back to the 1930s, when the federal government created the program. At the time, the country was in the throes of the Great Depression. Millions of people were out of work, including 2 million construction workers.

In an effort to combat unemployment, create jobs in the construction sector, and help more Americans become homeowners, the federal government introduced legislation to financially back mortgages, making them a safer bet for lenders.

This was a game-changer. Previous to this development, homebuyers had to make a down payment of 50% of the home’s total value, and the repayment schedule included a balloon payment for the rest of the mortgage after no longer than five years.

For many years, FHA loans were extremely popular. In fact, nearly 50% of first-time homebuyers chose these mortgages about a decade ago. However, now only 24% of first-time homebuyers use this option, according to the National Association of Realtors.

So, why are FHA loans on the decline now?