FHA loans can be an enticing option for first-time home-buyers.These Federal Housing Administration loans don't require the 20% down payment found in a standard mortgage and don't require pristine credit. Borrowers can put as little down as 3.5% down on the mortgage and stand to benefit from other perks like having their closing costs covered. Of course, there's the snag of extra private mortgage insurance to deal with: an upfront premium can cost borrowers 1.75% of the loan, and there's an annual premium between 0.5% and 1%. Those choosing the FHA route, as a result, need to be aware that interest charged over time is typically higher than on a traditional fixed-rate loan. But with down-payments so low, that might not be a deterrent.