Where would an agent refer a potential buyer who wants to obtain an FHA loan?

• A. To a mortgage broker outside the area
• B. To a local lending institution
• C. To the FHA office
• D. To the seller's bank

Answer: (B)

When a buyer asks about getting an FHA loan, the agent should refer them to a local lending institution that is FHA-approved. FHA loans are not issued by the FHA itself; private lenders originate, underwrite, and fund them while the FHA provides insurance. A local lender can assess eligibility, help with pre-qualification, guide the borrower through the application process, and coordinate the appraisal and closing with the agent. Local lenders are also more familiar with area-specific property standards and timelines, which helps keep the transaction smooth. Referring to an outside broker, the FHA office, or the seller’s bank isn’t appropriate for obtaining FHA financing, since those options don’t provide the actual loan processing and underwriting a borrower needs.