Loans insured by a government agency are referred to as _____________.

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Loans insured by a government agency are referred to as FHA loans. The Federal Housing Administration (FHA) is a government agency that provides mortgage insurance on loans made by approved lenders to borrowers with low to moderate incomes. This insurance protects lenders against losses that may occur if a borrower defaults on the loan, thereby encouraging lenders to offer loans to a wider range of borrowers who might not qualify for traditional financing.

FHA loans are an essential part of the housing finance system, especially for first-time homebuyers and those with less-than-perfect credit. They typically require a lower down payment than conventional loans, making homeownership more accessible.

In contrast, conventional loans rely on private lenders and do not have government insurance, which means they carry higher risks for lenders and may require a larger down payment. VA loans, while also backed by a government agency (the Department of Veterans Affairs), are specifically designed for veterans and active military personnel, not for the general home-buying public. Home equity loans allow homeowners to borrow against the equity in their homes but are not categorized as loans insured by government agencies.

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