Secondary financing from someone other than a family member is permitted in conjunction with an FHA loan if what condition is met?

The correct answer highlights an important aspect of FHA loans and financing in general. For secondary financing to be acceptable in conjunction with an FHA loan, the combined amount of the primary and secondary loans must not exceed the maximum loan-to-value (LTV) ratio set by the FHA. This means that the total debt against the property, including both loans, should maintain a ratio that aligns with the FHA's guidelines to ensure that the borrower remains within manageable limits of debt relative to the property's value.

This requirement serves to protect lenders and ensure that borrowers do not overextend themselves financially, thus reducing the risk of default. By maintaining an appropriate LTV ratio, it enhances the financial stability of the loan by ensuring the borrower can meet their repayment obligations within a reasonable range of their property's value.

The other conditions presented do not apply in this context. Secondary financing does not necessarily have to be interest-free, a decrease in property value does not affect the validity of secondary financing, and securing the secondary loan with a different property does not meet the criteria for FHA loan compliance in terms of LTV ratios.