Which of the following types of loans is typically backed by a government agency?

The FHA loan is specifically designed to be backed by the Federal Housing Administration, which is a government agency. This backing allows lenders to offer loans to borrowers who might not qualify for conventional financing due to lower credit scores, smaller down payments, or other financial challenges. The FHA loan program is intended to promote homeownership by reducing the risk for lenders, thereby encouraging them to lend to a broader range of borrowers.

In contrast, conventional loans are not backed by any government agency; they are primarily issued by private lenders and may require stricter credit and income criteria. Interest-only loans allow borrowers to pay only the interest for a certain period, which can be riskier, but they do not have the government backing. Lastly, private money loans are typically provided by private investors rather than institutions or government agencies, and they often come with their own sets of conditions and risk profiles. This underscores the unique role of FHA loans in facilitating access to home financing for many Americans.