FHA loan requires 3%. Does that 3% go against the actual loan or is just a requirement. (Extra)?

Which one is better conventional or FHA loan? @ closing FHA requires 3%. I don't think conventional requires anything. Everyone says FHA is the best way to go. I don't see how. What about the 3%. Let's say the loan is 160000. After the 3% is paid, does the price of the loan go to 155200?