Real estate agent Carlos is helping first-time homebuyer Maria understand her financing options. Maria has been pre-approved for a conventional loan but is concerned about mortgage insurance costs. Carlos suggests she consider an FHA loan instead. What key difference should Carlos explain about FHA loans in Florida?
Correct Answer
C) FHA loans require mortgage insurance for the life of the loan if down payment is less than 10%
Correct: C - FHA loans require mortgage insurance premiums (MIP) for the life of the loan when the down payment is less than 10%. Why not A: FHA loans typically accept lower credit scores than conventional loans. Why not B: FHA interest rates are often competitive with conventional loans. Why not D: FHA loan limits in Florida vary by county and are much higher than $200,000.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
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