Ace the Hawaii Pre-Licensing Exam 2025 – Surf Your Way to Real Estate Success!

FHA loans are specifically designed to provide mortgage insurance to lenders, thereby reducing the risk associated with loans made to borrowers who may have lower credit scores or limited financial resources. The Federal Housing Administration insures these loans, allowing lenders to offer more favorable terms, such as lower down payments and interest rates. This insurance helps promote home ownership by making it more accessible to a broader range of individuals.

In contrast, conventional loans are not insured or guaranteed by a government agency and typically have stricter qualification requirements. VA loans are a separate type of loan backed by the Department of Veterans Affairs, available exclusively to eligible veterans and service members, and do not involve FHA insurance. Home equity loans are secured by the equity in a home but do not fall under the purview of FHA mortgage insurance. Therefore, FHA loans are the correct answer because they directly relate to the insurance provided by the Federal Housing Administration.