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Which loan guarantees repayment of the loan, covers the top 25% of the loan amount, is assumable, and requires occupancy?

  1. FHA Loan

  2. VA Loan

  3. Blanket Loan

  4. Package Loan

The correct answer is: VA Loan

The selected answer, which identifies the VA Loan, is correct because VA Loans are specifically designed to assist veterans, active-duty service members, and certain members of the National Guard and Reserves in purchasing homes. One key feature of VA Loans is that they guarantee repayment to the lender for the top 25% of the loan amount. This guarantee reduces the risk for lenders, allowing them to offer favorable terms, including no down payment and lower interest rates. Moreover, VA Loans are assumable, meaning that if the homeowner wants to sell their property, the new buyer can take over the existing loan without needing to refinance, provided they meet eligibility requirements. Additionally, these loans require the property to be occupied by the borrower, further emphasizing their purpose of providing housing support to veterans and active service members. In contrast, while FHA Loans also have certain benefits aimed at promoting homeownership, they do not have the same guarantees and assumptions as VA Loans. Blanket Loans and Package Loans serve different purposes, generally related to investment or business properties rather than personal residential loans backed by a government guarantee.