Texas Real Estate State Practice Exam

What type of loan includes components like PITI and is exemplified by FHA and VA loans?

1. FHA Loan

2. VA Loan

3. Blanket Loan

4. Package Loan

The correct answer is: Package Loan

The correct type of loan that includes components like Principal, Interest, Taxes, and Insurance (PITI) and is represented by both FHA and VA loans is a government-backed loan. FHA loans provide access to financing for individuals with lower credit scores and require a lower down payment, while VA loans are designed for veterans and active-duty service members, allowing eligible borrowers to secure a mortgage with no down payment and no private mortgage insurance. Both FHA and VA loans focus on affordability and accessibility, which is reflected in their inclusion of PITI as part of the overall monthly payment calculation. The mention of PITI suggests this loan structure aims to cover all principal, interest, and necessary insurances and taxes, thereby ensuring that borrowers can effectively manage their full housing costs. In contrast, blanket loans and package loans do not emphasize this component structure or have the same focus on specific borrower demographics and benefits. A blanket loan often involves multiple properties under one mortgage, while a package loan bundles real estate with personal property. Therefore, the ideal answer should highlight the government-backed loans, exemplified by FHA and VA, rather than focusing on the other types of loans listed.