Finance
A buyer obtains an FHA loan. The minimum down payment required is approximately:
A0%
B3.5%✓ Correct
C5%
D10%
Explanation
FHA loans require a minimum down payment of 3.5% for borrowers with a credit score of 580 or higher.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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