Final answer: No monthly mortgage insurance is not a benefit of an FHA loan. It is, in fact, a built-in cost that protects lenders from potential losses if a borrower defaults.
Therefore, the correct option is a. Higher debt ratio as it is not a feature of an FHA-insured loan.
FHA loan benefits include low down payments, great interest rates, easier credit rules, and financing for 1-4 units.
FHA-approved lenders can issue loans that are insured by the Federal Housing Administration and are ideal for buyers with low-to-moderate income. Conventional loans aren't insured or guaranteed by government agencies.
Used in combination with a FHA first mortgage, Home Advantage offers down payment assistance as a second mortgage up to 5 percent of a home's purchase price, which helps buyers cover the down payment and closing costs to purchase a home. Home Advantage features: Zero down payment required.
Final answer: Option 'FHA provides the money for the loan' is not a characteristic of FHA loans. FHA insures the loan provided by a private lender, guaranteeing that the lender will be repaid even if the borrower defaults.
The Fair Housing Act affords no protections to individuals with or without disabilities who present a direct threat to the persons or property of others.
The statement that is not true regarding an FHA-insured loan is that "The FHA lends money directly to borrowers." Instead, the FHA's primary role is to provide insurance for private lenders, and borrowers are required to pay upfront and annual premiums.
Unlike FHA loans, conventional loans are not insured or guaranteed by the government.
While FHA loans can provide increased accessibility for many homebuyers, they may not be the best fit for those looking to purchase a non-primary residence, properties that don't meet FHA inspection requirements, or homes that exceed loan limits.
The FHA's three requirements are that a property must be safe, secure, and structurally sound to qualify for one of their loans. Properties cannot have adverse conditions that might imperil the homeowner, and must meet proper building codes. As a buyer, these standards protect you from buying an unsafe property.
The correct answer to this question is option D: An FHA loan is usually more attractive to borrowers who have lower credit scores and down payments. The Federal Housing Administration (FHA), created in 1934, works to provide housing loans to people who may not be eligible for typical homeownership.
Which loan is better: FHA or conventional? To a large extent, that depends on you and your financial profile. Generally, a conventional loan is best for those with strong credit and a bigger home buying budget. If your credit score is below 620, a loan backed by the FHA might be your only option.
FHA Loan Limits
According to HUD, the maximum FHA lending amount for high-cost areas (such as large metropolitan areas) is $1,209,750 for 2025. In lower-cost areas, the FHA limits are based on county, but generally, for one-unit properties the 2025 limit is $524,225. If you have multiple units, limits may be higher.
Among the protected classes are race, color, national origin, religion, sex, familial status, and handicap. However, sexual orientation is not explicitly listed as a protected class under the Fair Housing Act.
FHA mortgage insurance protects lenders against losses. If a property owner defaults on their mortgage, we'll pay a claim to the lender for the unpaid principal balance. Because lenders take on less risk, they are able to offer more mortgages to homebuyers.
One feature that is NOT characteristic of an FHA-insured loan is the requirement of a 20% down payment. Unlike traditional loans that often require a significant down payment and thorough verification of income, FHA loans typically allow for lower down payments and are more lenient with credit qualifications.
Final answer: correct option C. The correct statement about FHA loans is that they are insured by the Federal Housing Administration, which reduces risk for the lender.
The Federal Housing Administration (FHA) provides mortgage insurance on single-family, multifamily, manufactured home, and hospital loans made by FHA-approved lenders throughout the United States and its territories.
The FHA prohibits discrimination on the basis of “race, color, religion, sex, handicap, familial status, or national origin....” In general, the FHA applies broadly to all sorts of housing, public and private, including single family homes, apartments, condominiums, mobile homes, and others.
Once your loan is approved, FHA will insure the loan and pay the lender if you default on the mortgage. Because the lender is protected by this insur- ance, the lender can give you better terms on your loan. —Some lenders require borrowers to pay 10 percent or more of the price of a home in cash as a downpayment.
Current FHA mortgage rates
Mortgage rates have gone up recently. In December, conventional 30-year mortgage rates averaged 6.42%, according to Zillow data. And they've been even higher this month. But keep in mind that FHA rates are typically lower than conventional rates.