Real Estate Glossary

What is Guarantee Mortgage?

A guaranteed mortgage is a type of mortgage in which the lender is guaranteed payment in the event that the borrower defaults on the loan. The guarantee is usually provided by a government agency, such as the Federal Housing Administration (FHA) or the Veterans Affairs (VA), or by a private mortgage insurance company. In this case, the agency or company will compensate the lender for any losses they incur as a result of the borrower defaulting on the loan. This type of mortgage is often considered to be a lower-risk option for lenders, and as a result, may offer more favorable terms and conditions, such as lower down payment requirements, to borrowers who may not qualify for a traditional mortgage.