Which requirement is true for a borrower to qualify for a Federal Housing Administration (FHA) loan?

A minimum down payment of 3.5% is indeed a requirement for a borrower to qualify for a Federal Housing Administration (FHA) loan. This low down payment option is one of the key features that makes FHA loans attractive, especially for first-time homebuyers or those with lower credit scores or limited savings.

FHA loans are designed to promote homeownership among those who might struggle to qualify for conventional loans that often require larger down payments. By allowing a down payment as low as 3.5%, the FHA aims to make homeownership more accessible to a broader range of borrowers.

In contrast, other options are not aligned with FHA loan requirements. For example, while the FHA does consider credit history, it does not waive credit checks entirely, which would make option B inaccurate. Conventional credit standards also do not apply to FHA loans, which often have more flexible guidelines, thus rendering option C incorrect. Finally, option D is not applicable because the property does not need to be free and clear; homebuyers can use FHA loans to purchase properties that have existing liens, provided they meet the FHA’s guidelines and the loans are structured properly.