A buyer compares FHA and VA financing and asks what the federal agencies actually do. Which answer is most accurate?
Correct Answer
C) FHA insures approved lenders, while VA guarantees a portion of eligible loans
That is the correct distinction. HUD explains that FHA insures approved lenders against losses on eligible FHA loans, while VA guidance explains that the VA guarantees a portion of eligible loans made by private lenders.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
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