Should one fail to pay, FHA insures mortgage loans made by approved lending institutions. The FHA insures a variety of mortgages, including FRMs, ARMs, GEMs and GPMs. Down payments are low - 5 percent or less. The FHA doesn't set the interest rate on loans it insures, so you'll need to shop around for the best rate.
The FHA limits the amount it will insure to whichever is less: 95% of the local average home price or 75% of the loan limit set by the Federal Home Loan Mortgage Corporation, a large buyer and reseller of mortgages.