What kind of mortgage is guaranteed by a third party?

The correct answer is a Guarantee Mortgage, which refers to a type of mortgage that is backed by a third party that agrees to assume responsibility for the loan in case the borrower defaults. This guarantee effectively reduces the risk for lenders, making them more willing to provide loans to borrowers who may not meet the conventional lending criteria.

In the context of a Guaranteed Mortgage, this backing can come from government programs or private entities that essentially provide a safety net for the lender. This assurance can make it easier for borrowers to secure financing, as the lender has the confidence that they will be compensated if the borrower fails to make payments.

FHA and VA loans are also guaranteed by government entities, which makes them low-risk for lenders, but they are categorized specifically under their respective programs (Federal Housing Administration and Department of Veterans Affairs). A conventional mortgage, on the other hand, does not have a third-party guarantee and is typically governed by the terms set between the lender and borrower without external backing.