Final answer:
FHA requires borrowers to pay mortgage insurance, which helps protect the lender in case the borrower defaults on the loan. This insurance is separate from property, health, or auto insurance, and consists of both upfront and annual costs included in the mortgage payment.
Step-by-step explanation:
The type of insurance that the Federal Housing Administration (FHA) requires borrowers to pay is mortgage insurance. This insurance is a protective measure required by the FHA to minimize the risk of loss in case the borrower defaults on the loan. Mortgage insurance is different from property insurance, which covers damage to your home from events like fire or theft; health insurance, which covers medical expenses; and auto insurance, which covers automobile accidents. While all these are important forms of insurance, for FHA loans specifically, mortgage insurance is required and includes both an upfront and a recurring annual cost, usually factored into the monthly mortgage payment.