Which type of loan is typically government-insured and requires a low down payment?

Which type of loan is typically government-insured and requires a low down payment?

• A. Conventional Loan
• B. FHA Loan
• C. VA Loan
• D. USDA Loan

Answer: (B)

The FHA Loan is typically government-insured, which distinguishes it from other types of loans. These loans are backed by the Federal Housing Administration, making them a popular choice for first-time homebuyers and those with limited financial resources. One key feature of FHA loans is their low down payment requirement, which can be as low as 3.5% of the purchase price. This accessibility helps borrowers who may not have substantial savings to afford a traditional down payment, thus facilitating home ownership for a broader segment of the population. Additionally, FHA loans also have flexible credit score requirements, further enhancing their appeal to buyers looking to enter the housing market. This loan type serves to stimulate home buying, particularly for those who might face obstacles in securing financing through conventional routes.

The FHA Loan is typically government-insured, which distinguishes it from other types of loans. These loans are backed by the Federal Housing Administration, making them a popular choice for first-time homebuyers and those with limited financial resources. One key feature of FHA loans is their low down payment requirement, which can be as low as 3.5% of the purchase price. This accessibility helps borrowers who may not have substantial savings to afford a traditional down payment, thus facilitating home ownership for a broader segment of the population.

Additionally, FHA loans also have flexible credit score requirements, further enhancing their appeal to buyers looking to enter the housing market. This loan type serves to stimulate home buying, particularly for those who might face obstacles in securing financing through conventional routes.