A mortgage insured by the Federal Housing Administration, typically requiring a lower down payment than conventional loans.
Why FHA Loan matters on the exam
This term belongs to Financing. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using FHA Loan
Every Freehold question shows why the right answer is right — and cites its source.
Which statement about private mortgage insurance is correct?
PMI protects the borrower if the lender later becomes insolvent or fails
PMI is required on every FHA loan in place of the separate mortgage insurance premium
PMI eliminates the lender's need to order an appraisal before closing
PMI protects the lender against loss if the borrower defaults on a high loan-to-value conventional loan
Show answer & explanation
PMI protects the lender against loss if the borrower defaults on a high loan-to-value conventional loan — PMI is purchased to protect the lender, not the borrower, against loss from default when a conventional loan has a high loan-to-value ratio and reduced borrower equity.
Source: PSI National Real Estate Exam Content Outline §4 Financing
Many federally related residential mortgage loans are exempt from state usury limits because:
Usury laws have never applied to real estate lending
Federal law preempts state usury limits for many types of residential mortgage loans
Lenders making these particular loans are themselves federally chartered institutions
State law requires every FHA loan to charge the maximum rate that usury statutes permit
Show answer & explanation
Federal law preempts state usury limits for many types of residential mortgage loans — Federal preemption exempts many residential first mortgage loans from state usury ceilings, which is why usury limits more commonly affect private or seller-financed loans than institutional first mortgages.
Source: PSI National Real Estate Exam Content Outline §4 Financing
Freehold is an independent study resource and is not affiliated with, endorsed by, or sponsored by PSI, Pearson VUE, or any state real estate licensing board or commission. Freehold does not guarantee passage of any licensing exam.
