Alabama Real Estate Practice Exam

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What is required for an FHA loan?

  1. At least 20% down payment

  2. Using a non-FHA-approved lender

  3. Buying a property with more than 4 units

  4. Purchaser must use an FHA-approved lender

The correct answer is: Purchaser must use an FHA-approved lender

An FHA loan is a type of home mortgage that is insured by the Federal Housing Administration. This insurance protects lenders from financial loss in case the borrower defaults on the loan. In order to qualify for an FHA loan, it is necessary for the purchaser to use an FHA-approved lender. This ensures that the loan is being administered by a reputable and financially stable institution. This also means that the borrower will have access to various FHA loan products and benefits, such as lower down payment options and lower interest rates. Options A, B, and C are incorrect because they do not align with the requirements for an FHA loan. Option A suggests that a down payment of 20% is required, but FHA loans typically have a lower down payment requirement. Option B mentions a non-FHA-approved lender, which would not meet the requirement of using an FHA-approved lender. Option C mentions buying a property with more than

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