Finance
A VA-guaranteed home loan requires the borrower to pay:
AA minimum 3.5% down payment
BPrivate mortgage insurance (PMI) for the life of the loan
CA VA funding fee (which may be financed into the loan)✓ Correct
D20% down payment to avoid PMI
Explanation
VA loans do not require a down payment or monthly mortgage insurance. However, most borrowers must pay a one-time VA funding fee, which varies based on service type, down payment, and whether it is a first use.
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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.
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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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.
Math Concepts
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