Finance
A Vermont first-time homebuyer obtains an FHA loan. Which of the following is a requirement specific to FHA loans?
AA minimum down payment of 10%
BMortgage insurance premium (MIP) regardless of loan-to-value ratio✓ Correct
CThe property must be in a rural area
DThe borrower must have a credit score of at least 750
Explanation
FHA loans require mortgage insurance premiums (MIP) — both an upfront premium and annual premiums — regardless of the loan-to-value ratio. This protects the lender in case of default.
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