Which of the Four C's of Credit may require a buyer to consider an FHA loan when unable to qualify for a conventional loan?

The correct answer focuses on "Capital," which in the context of the Four C's of Credit refers to the buyer's financial reserves or down payment ability. When a buyer has limited capital, they may struggle to meet the down payment and reserve requirements typically associated with conventional loans.

FHA loans are designed to accommodate buyers who may not have substantial capital. They require lower down payments (as low as 3.5% of the purchase price) and are more lenient regarding credit scores and overall financial history. This makes FHA financing a more accessible option for individuals or families who may not have the savings to qualify for a conventional loan.

In contrast, character involves the borrower's credit history and reliability, capacity assesses the borrower's ability to repay based on their income and debt, and collateral pertains to the asset backing the loan. While important factors in the overall evaluation of a borrower, they do not directly address the specific situation of needing a loan type that requires a less significant capital investment. Thus, capital is the critical factor that may lead a buyer to consider an FHA loan when faced with challenges in obtaining conventional financing.