Which entity insures FHA loans?

Which entity insures FHA loans?

• A. The Federal Housing Administration
• B. Private mortgage insurers
• C. The Department of Veterans Affairs
• D. The Federal Reserve

Answer: (A)

FHA loans are insured by the Federal Housing Administration, which is part of HUD. The lender provides the loan, but the FHA guarantees it, protecting the lender against loss if the borrower defaults. This insurance enables lenders to offer loans with lower down payments and more flexible qualification requirements. Private mortgage insurers handle many conventional loans, not FHA loans. The Department of Veterans Affairs provides a loan guaranty for VA loans, not FHA loans. The Federal Reserve does not insure mortgages. So the entity that insures FHA loans is the Federal Housing Administration.

FHA loans are insured by the Federal Housing Administration, which is part of HUD. The lender provides the loan, but the FHA guarantees it, protecting the lender against loss if the borrower defaults. This insurance enables lenders to offer loans with lower down payments and more flexible qualification requirements. Private mortgage insurers handle many conventional loans, not FHA loans. The Department of Veterans Affairs provides a loan guaranty for VA loans, not FHA loans. The Federal Reserve does not insure mortgages. So the entity that insures FHA loans is the Federal Housing Administration.