How does the Federal Housing Administration (FHA) differ from the Department of Veterans Affairs (VA) regarding mortgage requirements?

The Federal Housing Administration (FHA) provides mortgage insurance on loans made by approved lenders to borrowers with low to moderate incomes. This mortgage insurance protects lenders against losses if a borrower defaults, which ultimately enables lenders to offer loans to a broader range of potential homeowners. Additionally, the FHA establishes a maximum loan amount depending on the region to ensure that the loans align with the market conditions and housing prices in different areas.

In contrast, the Department of Veterans Affairs (VA) does not have a maximum loan amount standard; it guarantees loans issued to veterans and active-duty service members, but these loans often do not require a down payment, depending on the veteran’s entitlement. This is a critical distinction as it underscores the supportive role the FHA plays in insuring loans, as opposed to the VA's guarantee that helps veterans obtain loans with favorable terms.

Option detailing FHA's insurance role and loan limits accurately reflects its function and how it contrasts with the VA's mortgage benefits, making it the correct choice.