Two buyers cannot afford down payment on 3-unit residence. Government program requires mortgage default insurance, permits 3.5% down payment. They used:
Correct Answer
C) VA-guaranteed loan with Mutual Mortgage Insurance
The correct answer is an FHA-insured loan from a private lender with Mutual Mortgage Insurance (MMI) because the FHA program operates by insuring loans originated by approved private lenders — the FHA itself does not lend money directly. The 3.5% minimum down payment and mandatory mortgage default insurance (MMI/MIP) are the defining characteristics of the standard FHA Section 203(b) loan program, exactly matching the scenario described.
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Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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