North Carolina Broker Reciprocal Practice Exam

Government loans are typically insured by the Federal Housing Administration (FHA). The FHA was established to improve homeownership opportunities by providing mortgage insurance on loans made by approved lenders to borrowers with low to moderate incomes. This insurance protects lenders against the risk of default, making it easier for these borrowers to obtain financing.

While other organizations like the Veterans Affairs (VA) offer guaranteed loans for eligible veterans and active-duty military personnel, and the U.S. Department of Agriculture (USDA) provides loans for rural development, the FHA specifically focuses on insuring loans to promote affordable housing. HUD, the Department of Housing and Urban Development, oversees the FHA but does not itself provide insurance; rather, it manages programs that aim to ensure safe housing for various populations.

In this context, the FHA's role is unique as it specifically facilitates insured loans, making it the correct answer to the question regarding the organization that typically insures government loans.