### What is the primary purpose of a VA loan? - [x] To assist veterans in buying homes with favorable terms - [ ] To provide loans at higher interest rates - [ ] To help veterans refinance their existing mortgages easily - [ ] To offer loans for investment properties to veterans > **Explanation:** VA loans are designed to assist veterans by offering favorable terms such as no down payment and lower interest rates. This helps veterans purchase homes despite potentially facing financial challenges that conventional buyers might not have. ### Who is primarily eligible for a VA loan? - [ ] First-time homebuyers - [x] Military veterans - [ ] Senior citizens - [ ] Individuals with high net worth > **Explanation:** VA loans are tailored for military veterans, recognizing their service and providing them with favorable borrowing terms to facilitate homeownership. ### What is one significant benefit of a VA loan over a conventional loan? - [ ] Higher loan limits - [ ] Easier application process - [x] No down payment requirement - [ ] More extended repayment terms > **Explanation:** One of the standout features of VA loans is that they often do not require a down payment, making home ownership more accessible for veterans who may not have a large amount of savings. ### Who guarantees VA loans to protect the lenders? - [ ] Private insurance companies - [ ] Veteran's employers - [ ] Veteran's family members - [x] Federal government through the Veterans Administration > **Explanation:** The federal government, through the Veterans Administration (VA), guarantees VA loans. This guarantee assures lenders that they will receive payment even if the veteran defaults on the loan. ### How do interest rates for VA loans typically compare to those of conventional loans? - [ ] Higher than conventional loans - [x] Lower than conventional loans - [ ] Similar to adjustable-rate mortgages - [ ] Variable based on veteran's credit score > **Explanation:** VA loans generally come with lower interest rates compared to conventional loans. This benefit results from the VA guarantee, which decreases the lender's risk. ### What type of down payment is required for most VA loans? - [ ] 25% of the home's price - [ ] 10% of the home's price - [ ] 5% of the home's price - [x] No down payment required > **Explanation:** Most VA loans do not require a down payment, offering significant financial relief to veterans who may not have substantial savings set aside for this purpose. ### Why might veterans be at a financial disadvantage when applying for conventional loans? - [ ] Their credit scores are often lower than average - [ ] They typically earn lower salaries - [x] They may not have the substantial down payment required - [ ] They lack adequate borrowing history > **Explanation:** Veterans may not have access to the large down payment typically required by conventional loans, which can place them at a financial disadvantage when applying for such loans. ### What government entity underwrites VA loans? - [ ] Federal Reserve - [ ] Department of Housing and Urban Development (HUD) - [x] Veterans Administration (VA) - [ ] Federal Deposit Insurance Corporation (FDIC) > **Explanation:** The Veterans Administration (VA) underwrites VA loans, providing a guarantee to lenders which substantially reduces the risk of default. ### How does a VA loan benefit lenders? - [ ] Lenders can charge higher fees - [ ] Lenders face greater regulatory oversight - [x] Lenders receive a federal guarantee against default - [ ] Lenders can offer loans only in military-centric locations > **Explanation:** The federal guarantee provided by the VA reduces the risk for lenders if a veteran defaults on the loan, making it more attractive to lend to veterans. ### In addition to veterans, who else might be eligible for a VA loan? - [ ] Senior citizens over 65 - [x] Active-duty military personnel and certain reservists - [ ] Dependents of veterans - [ ] Government employees > **Explanation:** Besides veterans, active-duty military personnel and certain members of the reserves are also eligible for VA loans, broadening the scope of those who can benefit from this type of financing.