7 crucial facts about FHA loans

In the wake of the housing bubble's collapse, FHA loans have taken on renewed importance for today's mortgage borrowers.

Simply stated, an FHA loan is a mortgage insured by the Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.

Because of that insurance, lenders can -- and do -- offer FHA loans at attractive interest rates and with less stringent and more flexible qualification requirements.

Following are seven facts all buyers should know about FHA loans.