California Real Estate Practice Exam 2025 – The All-in-One Resource to Ace Your Licensing Exam!

Question: 1 / 585

A conventional loan would differ from an FHA loan in that the conventional loan would have:

Lower down payment requirements

Lower interest rates

Lower loan-to-value ratio

A conventional loan typically requires a higher down payment compared to an FHA loan. FHA loans are designed for first-time homebuyers or those with less-than-perfect credit, allowing for a lower down payment—often as low as 3.5% of the purchase price. In contrast, conventional loans usually require at least 5% to 20% down, depending on the lender's guidelines and the borrower's creditworthiness.

This distinction is significant as it makes FHA loans more accessible for individuals or families who may be struggling to save a larger sum for a down payment. Therefore, understanding the differences in down payment requirements can help potential buyers make informed decisions based on their financial situation and readiness to enter the housing market.

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Lower monthly payments

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