Which type of loan is backed by the Federal Housing Administration?

Which type of loan is backed by the Federal Housing Administration?

• A. Lease-Purchase Mortgage Loan
• B. Insured Mortgage
• C. Jumbo Loan
• D. Junior Mortgage

Answer: (B)

The type of loan that is backed by the Federal Housing Administration (FHA) is the insured mortgage. FHA loans are specifically designed to assist low-to-moderate-income individuals and families in obtaining affordable financing for their homes. When a loan is insured by the FHA, it means that the government guarantees a portion of the loan amount, which reduces the lender's risk. This backing allows lenders to offer more favorable terms, such as lower down payments and easier credit qualifying standards, making homeownership more accessible. In contrast, other loan types listed do not have this specific backing. The lease-purchase mortgage involves an agreement between a buyer and seller that allows a tenant to purchase a property after a period of leasing. A jumbo loan exceeds the conforming loan limits set by government-sponsored enterprises and does not receive government backing, making it a riskier type of loan. Lastly, a junior mortgage is a secondary loan taken out on a property that is already mortgaged, which does not involve the FHA's backing.

The type of loan that is backed by the Federal Housing Administration (FHA) is the insured mortgage. FHA loans are specifically designed to assist low-to-moderate-income individuals and families in obtaining affordable financing for their homes. When a loan is insured by the FHA, it means that the government guarantees a portion of the loan amount, which reduces the lender's risk. This backing allows lenders to offer more favorable terms, such as lower down payments and easier credit qualifying standards, making homeownership more accessible.

In contrast, other loan types listed do not have this specific backing. The lease-purchase mortgage involves an agreement between a buyer and seller that allows a tenant to purchase a property after a period of leasing. A jumbo loan exceeds the conforming loan limits set by government-sponsored enterprises and does not receive government backing, making it a riskier type of loan. Lastly, a junior mortgage is a secondary loan taken out on a property that is already mortgaged, which does not involve the FHA's backing.