Question 81

A house appraised at $85,000 is most likely to qualify for a 100% loan under a VA-guaranteed loan.

A VA-guaranteed loan allows eligible veterans and active-duty service members to obtain financing for a home without any down payment, thus facilitating a 100% loan relative to the appraised value.

A) VA-guaranteed loan

This option is correct because VA-guaranteed loans are specifically designed to offer veterans the opportunity to purchase homes without needing a down payment. This means that the buyer can finance the entire appraised value of the house, making it a suitable choice for a 100% loan.

B) FHA-insured loan

An FHA-insured loan typically requires a minimum down payment of 3.5% of the purchase price or appraised value. Therefore, it does not allow for a 100% financing option, which makes this choice incorrect for the question's context.

C) conventional loan insured by private mortgage insurance

While a conventional loan with private mortgage insurance (PMI) can have a lower down payment, it usually requires at least 3% to 5% down. Consequently, this option does not satisfy the requirement for a 100% loan and is thus incorrect.

D) conventional uninsured loan

A conventional uninsured loan would typically require a down payment, which varies based on lender policies. Since this option cannot provide a 100% loan against the appraised value, it is not applicable in this context.

Conclusion

In summary, the VA-guaranteed loan is the only option that allows for 100% financing on the appraised value of the house, making it the most suitable choice. The other options either require a down payment or do not provide the financing structure necessary to meet the criteria of a 100% loan.