Finance
Which of the following is a 'government-backed' mortgage loan program used in Mississippi?
AA conventional conforming loan
BAn FHA loan insured by the Federal Housing Administration✓ Correct
CA jumbo loan
DA portfolio loan held by a local bank
Explanation
FHA loans are insured by the Federal Housing Administration (a government agency), meaning the government guarantees the lender against borrower default. VA and USDA loans are also government-backed.
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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