What is one of the clauses in the characteristics of high-cost loans?

The correct answer is that the borrower must reside in the property financed. High-cost loans, often governed by specific regulations, typically require that the borrower occupies the property as their primary residence. This characteristic is essential because these types of loans are designed to protect consumers who are purchasing homes or properties intended for personal use rather than solely investment opportunities.

Understanding this requirement helps ensure that consumer protections are in place for individuals who may be more vulnerable in high-cost lending situations. It promotes responsible lending practices by ensuring that the loans are intended for personal habitation rather than commercial use, which would have different regulatory frameworks and risks associated with them.

The other options reflect incorrect notions about high-cost loans. For instance, there is no federal requirement for loan amounts to exceed federal limits, individuals are indeed allowed to borrow, and high-cost loans can be related to residential properties rather than exclusively commercial real estate.