Finance
FHA loans differ from conventional loans primarily because FHA loans:
ARequire no down payment for all borrowers
BAre insured by the federal government, allowing lower down payments and more flexible qualifying criteria✓ Correct
CAre only available to first-time homebuyers
DHave fixed interest rates mandated by the government
Explanation
FHA loans are insured by the Federal Housing Administration, which reduces the lender's risk and allows lenders to offer more flexible qualifying criteria (lower credit scores, higher debt ratios) and lower down payments (as little as 3.5%). This insurance comes at a cost—borrowers pay mortgage insurance premiums (MIP).
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