Which of the following is NOT characteristic of a DVA loan?

A DVA (Department of Veterans Affairs) loan is a type of mortgage that provides various benefits to eligible veterans and, in some cases, their dependents. The key characteristics of a DVA loan highlight its unique nature, specifically its guarantee rather than insurance.

The statement that the loan is insured is not true for a DVA loan. Instead, these loans are guaranteed by the VA, which means that if the borrower defaults, the VA will step in to cover a portion of the lender’s loss. This guarantee allows lenders to offer favorable terms, such as no down payment for qualified borrowers, competitive interest rates, and no private mortgage insurance (PMI) costs. The essence of the DVA loan is its guarantee by the government, which offers significant protections and incentives for both veterans and lenders.

In contrast, the other characteristics accurately describe the DVA loan: it is indeed guaranteed (which facilitates unique loan terms), only eligible veterans and their dependents can apply for it (ensuring that those who have served and their families can benefit), and the requirement for little or no down payment makes homeownership accessible for many veterans. Thus, highlighting that the DVA loan is guaranteed rather than insured helps differentiate it from conventional loans that might require insurance policies