Which of the following is NOT a typical FHA loan feature?

• A. Three and a half percent down payment
• B. Mortgage Insurance Premium
• C. Requires a 20% down payment
• D. Regional mortgage limits

Answer: (C)

This question tests how FHA loans differ from conventional financing in terms of down payment and insurance requirements. FHA loans are designed to be accessible with a smaller upfront cost, typically requiring about 3.5% down for borrowers with qualifying credit. They also include Mortgage Insurance Premium to protect the lender, and they operate under regional limits that cap how much you can borrow in a given area. A 20% down payment is not typical for FHA loans because the program’s purpose is to lower the upfront hurdle to obtain financing. A 20% down payment is more characteristic of conventional loans, where reaching that level can sometimes avoid private mortgage insurance. So the statement about needing a 20% down payment doesn’t fit FHA features.