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Unit 13: Financing Types

Types of Mortgages and Sources of Financing

13
3 exam questionsLow Priority
FHA, VA, conventional loans, and alternative financing sources.

Quick Explanation

5 min read

Different loan types serve different buyers. FHA loans require 3.5% down with 580+ credit score. VA loans offer 100% financing for eligible veterans. Conventional loans follow Fannie Mae/Freddie Mac guidelines.

Key Points — What Matters for the Exam

1
FHA = 3.5% minimum down payment, 580+ credit score, mortgage insurance required
2
VA = 100% financing (no down payment), eligible veterans/military/surviving spouses
3
Conventional = follows Fannie Mae/Freddie Mac guidelines
4
Purchase Money Mortgage = seller financing (seller acts as lender)
5
FHA loan limits vary by geographic area (county)
6
VA loans: no PMI, but VA funding fee required

Memory Trick

FHA = 3.5% down for first-timers. VA = Veterans get 0% down. Conventional = 20% down avoids PMI.

Common Trap Answers — Don't Fall For These

FHA loan limits are set by COUNTY (geographic area), not income
VA loans have NO PMI but DO have a VA funding fee
Purchase money mortgage = SELLER financing (not a bank loan)