Unit 8: Government Financing Programs

Question 1

What are the 2 government financing programs?

Answer 1

1. FHA

2. VA

Question 2

Which program provides its own mortgage default insurance?

Answer 2

FHA, it insures lenders against loss because of borrower default.

Question 3

Which program guarantees lenders against losses?

Answer 3

VA

Question 4

T/F Loan funds come from approved lenders, not FHA.

Answer 4

True

Question 5

How is the FHA loan program different from a conventional mortgage loan program?

Answer 5

Traditionally FHA has permitted a higher loan to value ratio.

Question 6

T/F There is no prepayment penalty or due on sale clause with a FHA or VA program.

Answer 6

True

Question 7

What clause must be the purchase agreement of a FHA or VA program?

Answer 7

Escape Clause. If a loan cannot be obtained (FHA) or the appraisal comes back too high, the buyer can cancel and is protected from any penalties.

Question 8

Which program has no down payment and the loan to value ratio can be up to 100%?

Answer 8

VA