Final answer:
FHA loans are 100% insured by the Federal Housing Administration, which guaranteed the payday of homeownership for many Americans, though FHA practices like redlining also led to discriminatory outcomes.
Step-by-step explanation:
An FHA loan is a type of government-backed mortgage insured by the Federal Housing Administration (FHA). These loans are popular with first-time homebuyers and those with lower credit scores because the requirements are less stringent compared to conventional loans. Answering the question directly, FHA loans are B) 100% insured by the government, meaning that should a borrower default on the loan, the FHA will pay a claim to the lender for the unpaid principal balance.
The aim of the FHA, established in 1934, was to stimulate the housing market by making loans more accessible and to ensure better housing standards. While FHA loans were a part of efforts to increase homeownership, they have a complicated history involving practices like redlining, which contributed to segregation and discrimination against minority communities.