Key Takeaways
- FHA (~15% share): 3.5% down, UFMIP + annual MIP, credit scores 500+.
- VA (~8% share): 0% down, funding fee, no monthly MI, veterans/military only.
- Conventional (~72% share): 3-5% down, PMI if < 20%, conforming limit $766,550.
- Fair Housing Act protects race, color, national origin, religion, sex, familial status, and disability.
This review covers the federal loan programs, GSEs, regulatory agencies, and fair housing requirements examined in Track 1. Understanding these systems is essential for advising clients on financing options and maintaining compliance.
Federal Programs and Institutions Summary
FHA, VA, and USDA provide government-backed mortgage options serving different borrower populations. FHA insures loans for borrowers with lower credit scores and down payments. VA guarantees loans for veterans with zero down payment and no monthly mortgage insurance. USDA provides zero-down financing in eligible rural areas. Conventional loans dominate with ~72% market share, with Fannie Mae and Freddie Mac purchasing conforming loans for the secondary market.
The CFPB, created by Dodd-Frank, enforces consumer financial protection laws including TILA, RESPA, ECOA, and HMDA. The Fair Housing Act prohibits discrimination based on seven protected classes and applies to virtually all housing transactions. Real estate professionals are never exempt from fair housing requirements.
Why it matters: Understanding this concept is essential for making informed investment decisions.
Key Takeaways
- ✓FHA (~15% share): 3.5% down, UFMIP + annual MIP, credit scores 500+.
- ✓VA (~8% share): 0% down, funding fee, no monthly MI, veterans/military only.
- ✓Conventional (~72% share): 3-5% down, PMI if < 20%, conforming limit $766,550.
- ✓Fair Housing Act protects race, color, national origin, religion, sex, familial status, and disability.
Sources
- HUD Federal Housing Programs Overview(2025-03-01)
- MBA Research and Economics Data(2025-03-01)
Common Mistakes to Avoid
Confusing FHA mortgage insurance premium (MIP) with private mortgage insurance (PMI) on conventional loans.
Consequence: Providing incorrect cost estimates and cancellation timelines to clients, as FHA MIP often cannot be canceled while PMI can.
Correction: Clearly distinguish between FHA MIP (often required for the life of the loan) and conventional PMI (cancellable at 80% LTV), and explain the cost implications of each to clients.
Assuming federal fair housing protections are the only protections that apply.
Consequence: Many states and localities add protected classes beyond the federal seven, and agents who ignore these additional protections face state-level enforcement.
Correction: Research state and local fair housing laws in your jurisdiction, which may add protected classes such as sexual orientation, gender identity, source of income, age, or marital status.
Test Your Knowledge
1.What is the minimum down payment for an FHA loan with a credit score of 580 or higher?
2.Which entity guarantees mortgage-backed securities with the full faith and credit of the U.S. government?
3.Which of the following is NOT a protected class under the federal Fair Housing Act?