#1
What does FHA stand for in the context of home loans?
Federal Housing Administration
ExplanationGovernment agency facilitating home loans.
#2
What is a key benefit of FHA loans?
Lower minimum credit scores are accepted
ExplanationMore lenient credit score requirements.
#3
Which entity insures FHA loans?
The U.S. Department of Housing and Urban Development (HUD)
ExplanationInsured by government agency HUD.
#4
What is the typical term length for an FHA loan?
30 years
ExplanationStandard loan term duration.
#5
What is a major difference between FHA loans and conventional loans?
FHA loans require a lower minimum credit score
ExplanationLower credit score requirement compared to conventional loans.
#6
Which type of property is eligible for an FHA loan?
Primary residences
ExplanationLimited to primary residences.
#7
What is the minimum down payment required for an FHA loan?
3.5%
ExplanationLower down payment requirement.
#8
Which of the following is NOT a requirement for an FHA loan?
The borrower must make a 20% down payment
ExplanationNot obligated to make a large down payment.
#9
What is the maximum loan-to-value ratio for an FHA cash-out refinance loan?
85%
ExplanationMaximum cash-out allowance.
#10
What is the purpose of the FHA mortgage insurance premium (MIP)?
To protect the lender against losses if the borrower defaults on the loan
ExplanationProtects lender from default losses.
#11
What was the primary reason for the creation of the FHA in 1934?
To stimulate the housing market
ExplanationStimulate housing market growth.
#12
How often can the interest rate on an FHA Adjustable Rate Mortgage (ARM) adjust?
Once a year
ExplanationAnnual interest rate adjustment.
#13
How is the FHA funded?
Through mortgage insurance premiums paid by borrowers
ExplanationFinanced by insurance premiums.
#14
Can an FHA loan be used for investment properties?
No, it must be the borrower's primary residence
ExplanationRestricted to primary residences only.
#15
What does the FHA 203(k) loan program allow a borrower to do?
Finance both the purchase and rehabilitation of a home
ExplanationCombine purchase and renovation financing.
#16
Can borrowers with a bankruptcy filing qualify for an FHA loan?
Yes, but only after 2 years from the discharge date for Chapter 7
ExplanationBankruptcy discharge time requirement.
#17
What is the purpose of the FHA Energy Efficient Mortgage (EEM) program?
To finance energy-efficient upgrades for existing homes
ExplanationFinancing for energy-efficient upgrades.
#18
What is the purpose of the FHA Home Equity Conversion Mortgage (HECM) program?
To provide reverse mortgages for seniors
ExplanationReverse mortgage option for seniors.