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Real Estate Licensing Massachusetts-Real-Estate-Salesperson Exam - Topic 9 Question 2 Discussion
Topic #: 9
Which of the following assurances is provided to home buyers who purchase a $75,000 property with an FHA-insured mortgage?
Comprehensive and Detailed Explanation (150--250 words):
An FHA-insured mortgage ensures the lender against loss from borrower default but does not guarantee property values or eliminate government powers like eminent domain. FHA requires an FHA appraisal to confirm the property meets minimum standards of safety, soundness, and security, and to establish a value for loan purposes.
The FHA makes clear that the appraisal is for lender protection, not a guarantee to the buyer of condition or future value. A down payment (C) is still required (typically 3.5% minimum). Eminent domain (A) always remains a government power, and no program guarantees increasing neighborhood values (B).
Thus, the correct assurance FHA provides is that the property has been appraised for value.
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