Which of the following is a characteristic of FHA loans?

FHA loans are uniquely characterized by the fact that they are insured by the Federal Housing Administration. This insurance protects lenders in the event that the borrower defaults on the loan, making it less risky for lenders to offer financing to those with lower credit scores or smaller down payments. As a result, borrowers often benefit from more favorable terms, such as lower interest rates and reduced upfront costs.

The insurance provided by the FHA allows for a broader range of potential homeowners to qualify for a mortgage, promoting homeownership among individuals who may not meet the stricter criteria of conventional loans. This includes not only first-time buyers but also repeat buyers and those looking to refinance.

While there are specific features associated with FHA loans, such as lower down payment requirements, the defining characteristic remains the insurance provided by the FHA itself, which helps to stabilize the housing market and expand access to home financing.