What type of loan is designed primarily to assist first-time homebuyers?

The FHA loan is specifically designed to assist first-time homebuyers by providing them with lower down payment requirements and more flexible credit qualification criteria compared to conventional loans. FHA loans are backed by the Federal Housing Administration, which reduces the lender's risk, thus allowing first-time buyers, who may have limited savings or less-than-perfect credit, to secure financing. This accessibility makes FHA loans particularly appealing for individuals entering the housing market for the first time.

In contrast, conventional loans typically require a larger down payment and a higher credit score, making them less accessible for many first-time buyers. VA loans are targeted at veterans and active-duty service members, providing different benefits that cater to their unique situations. Home equity loans, on the other hand, are designed for existing homeowners to borrow against their accrued equity in the property and are not intended for first-time purchases.