Mortgage Loan Originator (MLO) Licensing Practice Test 2025 - Free MLO Practice Questions and Study Guide

Image Description

Question: 1 / 605

Are FHA loans fully insured or partially guaranteed?

Partially guaranteed

100% insured

FHA loans are indeed designed to be 100% insured by the Federal Housing Administration. This insurance is provided to protect lenders from losses associated with borrower defaults. When a borrower takes out an FHA loan, they pay an upfront mortgage insurance premium and ongoing monthly insurance premiums, which fund the FHA's insurance program. This comprehensive insurance enables lenders to offer favorable terms, including lower down payments and more lenient credit requirements, ultimately facilitating access to homeownership for borrowers who might not qualify for conventional loans. The nature of the full insurance provided by FHA loans plays a crucial role in enhancing the stability of the housing market and promoting homeownership among a diverse range of borrowers.

Get further explanation with Examzify DeepDiveBeta

Insured under certain conditions

Only for first-time home buyers

Next Question

Report this question

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy