Question 81

A VA-guaranteed loan

A buyer is most likely to obtain a 100% loan under a VA-guaranteed loan program, as this type of loan is specifically designed to offer financing without a down payment for eligible veterans and active-duty service members.

A) VA-guaranteed loan

This option is correct because VA-guaranteed loans allow qualified borrowers to purchase homes with no down payment, thus facilitating a 100% financing option. These loans are backed by the Department of Veterans Affairs, which provides the guarantee that allows lenders to offer favorable terms, including the absence of a required down payment.

B) FHA-insured loan

An FHA-insured loan typically requires a minimum down payment of 3.5% for qualified buyers. While these loans are accessible to many borrowers, they do not offer the 100% financing option that is characteristic of VA loans, making this choice incorrect in the context of the question.

C) conventional loan insured by private mortgage insurance

A conventional loan insured by private mortgage insurance (PMI) usually requires a down payment, which can range from 3% to 20%, depending on the lender's requirements and the buyer's credit profile. Therefore, this option does not provide the 100% financing that the question specifies, making it an incorrect choice.

D) conventional uninsured loan

A conventional uninsured loan also typically requires a down payment, as it is not backed by any government program. This option would not facilitate a 100% loan, as lenders usually require some form of equity from the buyer, rendering it an inappropriate answer for the scenario presented.

Conclusion

In summary, a VA-guaranteed loan is the only option that allows for 100% financing, making it the most suitable choice for a buyer seeking such a loan. Other options, including FHA loans, conventional loans with PMI, and uninsured conventional loans, all necessitate a down payment, thus failing to meet the criteria established by the question.