Real Estate Finance Exam Prep - Loan Types
What type of loan is guaranteed by a governmental agency?
VA loan
What type of loan is insured by a governmental agency?
FHA
What type of government loan typically requires only a 3.5% down payment?
FHA
In what type of government loan can the down payment be as low as 0%?
VA
What is MIP and when is it required?
Mortgage insurance premium, required for FHA loans
When is private mortgage insurance required?
When a conventional loan exceeds an 80/20 loan-to-value ratio
What type of mortgage insurance is required for a VA loan?
None; any requirement for mortgage insurance is prohibited with a VA loan
What is a non-conforming loan?
One that does not meet Fannie Mae/Freddie Mac guidelines, and therefore will be difficult to sell on the
secondary market
What type of entities are Fannie Mae and Freddie Mac?
Private corporations/government-sponsored entities (not governmental agencies)
Which two government-sponsored entities act as a link between the government, banks, and Wall
Street?
Fannie Mae and Freddie Mac, which buy mortgages, package them, and resell them as mortgage-backed
securities
Which mortgage market is comprised of lending institutions that lend directly to the consumer?
The primary mortgage market
Which financing product comes with an interest rate that fluctuates based on the economic index to
which it's tied?
Adjustable rate mortgage (ARM)
What's the term for debt paid off by making periodic payments consisting of interest and principal?
What type of loan is guaranteed by a governmental agency?
VA loan
What type of loan is insured by a governmental agency?
FHA
What type of government loan typically requires only a 3.5% down payment?
FHA
In what type of government loan can the down payment be as low as 0%?
VA
What is MIP and when is it required?
Mortgage insurance premium, required for FHA loans
When is private mortgage insurance required?
When a conventional loan exceeds an 80/20 loan-to-value ratio
What type of mortgage insurance is required for a VA loan?
None; any requirement for mortgage insurance is prohibited with a VA loan
What is a non-conforming loan?
One that does not meet Fannie Mae/Freddie Mac guidelines, and therefore will be difficult to sell on the
secondary market
What type of entities are Fannie Mae and Freddie Mac?
Private corporations/government-sponsored entities (not governmental agencies)
Which two government-sponsored entities act as a link between the government, banks, and Wall
Street?
Fannie Mae and Freddie Mac, which buy mortgages, package them, and resell them as mortgage-backed
securities
Which mortgage market is comprised of lending institutions that lend directly to the consumer?
The primary mortgage market
Which financing product comes with an interest rate that fluctuates based on the economic index to
which it's tied?
Adjustable rate mortgage (ARM)
What's the term for debt paid off by making periodic payments consisting of interest and principal?
