HUD CERTIFICATION 2026 TEST PAPER QUESTIONS
AND ANSWERS GRADED A+
✔✔In which situation would a client's responsibilities, recurring costs, and upfront costs
be evaluated?
-When considering closing costs
-When choosing a loan officer
-When weighing housing options
-When applying for a loan modification - ✔✔When weighing housing options
✔✔A client works 40 hours a week making $15 an hour. What is the highest monthly
mortgage the client can afford based on income if the client secures a conventional
loan?
-$728
-$806
-$936
-$1,118 - ✔✔$728
✔✔Which type of government insured loan was created for financing homes in rural
areas?
-VA
-Fannie Mae
-FHA
-USDA - ✔✔USDA
✔✔Which type of assistance administered by a public housing authority allows for
location flexibility. A client keeps having budget problems due to unexpected expenses.
Which financial tool would best assist this client to prepare for unexpected expenses
and avoid increasing credit usage?
-Emergency fund
-Line of credit
-Payday loan
-Retirement savings account - ✔✔Emergency fund
✔✔A client has a monthly household income of $2,300, monthly debt payments of
$450, and an optimal monthly housing ratio of 32%. What is the client's optimal monthly
housing payment?
-$592
-$736
-$880
,-$1,186 - ✔✔$736
✔✔What is the back-end ratio for a client with a monthly housing expense of $1,250, a
monthly total of $88 in other consumer debt payments, and a gross household income
of $4,460 per month (rounded to the nearest whole percent)?
-29%
-30%
-31%
-32% - ✔✔30%
✔✔A client earns a salary of $45,000 at a job held for three years. The client has credit
card bills, student loans, and a car loan totaling $500 per month. The client has already
saved $3,500 for a down payment and is using an FHA Energy Efficient Mortgage
(EEM).
If the client wants to make the minimum down payment for a home priced at $150,000,
how much more does the client need to save?
-$1,750
-$2,250
-$4,500
-$5,250 - ✔✔$1,750
✔✔Under which condition would most down payment assistance programs approve a
waiver of the home-ownership education requirement?
-Most will not waive the home-ownership education requirement
-When the home-buyer has successfully passed a home-ownership exam
-When the home-buyer has a verifiable disability or handicap
-When the home-buyer has completed four years of college - ✔✔Most will not waive the
home-ownership education requirement
✔✔Which type of assistance administered by a public housing authority allows for
location flexibility?
-USDA
-FHA
-Project-based vouchers
-Tenant-based vouchers - ✔✔Tenant-based vouchers
✔✔A client's payment history affects which factor of creditworthiness?
-Collateral
-Capacity
, -Character
-Capital - ✔✔Character
✔✔Which action may a lender take to determine a borrower's character?
-Calculate housing ratios to see debt obligations.
-Examine pay stubs to determine amount of income.
-Review the appraisal.
-Call an employer to verify employment. - ✔✔Call an employer to verify employment.
✔✔A client is in the process of purchasing a home with a sales price of $162,000. The
client has a net worth of $50,000, a credit score of 680, and a debt-to-income ratio of
36%. The home has appraised for $155,000. Which factor of creditworthiness will most
likely be an obstacle to purchasing the home?
-Character
-Capital
-Collateral
-Capacity - ✔✔Collateral
✔✔When a lender inquires about how much money a borrower has saved for a down
payment on a home, what factor is being considered?
-Character
-Collateral
-Capital
-Capacity - ✔✔Capital
✔✔A first-time buyer wants a conventional loan but does not have the assets to qualify.
This client may have to purchase with an FHA loan unless the client saves more money.
Which of the Four C's of Credit does this involve?
-Capacity
-Character
-Capital
-Collateral - ✔✔Capital
✔✔Which describes a home-buyer who would be ineligible as a first-time home-buyer,
as defined by most down payment assistance programs?
A client who sold a home five years ago for a net profit.
A client who lost a home to foreclosure two years ago.
A client who leases out units in a cousin's rental property.
A client who lives in a home owned by the client's parents. - ✔✔
AND ANSWERS GRADED A+
✔✔In which situation would a client's responsibilities, recurring costs, and upfront costs
be evaluated?
-When considering closing costs
-When choosing a loan officer
-When weighing housing options
-When applying for a loan modification - ✔✔When weighing housing options
✔✔A client works 40 hours a week making $15 an hour. What is the highest monthly
mortgage the client can afford based on income if the client secures a conventional
loan?
-$728
-$806
-$936
-$1,118 - ✔✔$728
✔✔Which type of government insured loan was created for financing homes in rural
areas?
-VA
-Fannie Mae
-FHA
-USDA - ✔✔USDA
✔✔Which type of assistance administered by a public housing authority allows for
location flexibility. A client keeps having budget problems due to unexpected expenses.
Which financial tool would best assist this client to prepare for unexpected expenses
and avoid increasing credit usage?
-Emergency fund
-Line of credit
-Payday loan
-Retirement savings account - ✔✔Emergency fund
✔✔A client has a monthly household income of $2,300, monthly debt payments of
$450, and an optimal monthly housing ratio of 32%. What is the client's optimal monthly
housing payment?
-$592
-$736
-$880
,-$1,186 - ✔✔$736
✔✔What is the back-end ratio for a client with a monthly housing expense of $1,250, a
monthly total of $88 in other consumer debt payments, and a gross household income
of $4,460 per month (rounded to the nearest whole percent)?
-29%
-30%
-31%
-32% - ✔✔30%
✔✔A client earns a salary of $45,000 at a job held for three years. The client has credit
card bills, student loans, and a car loan totaling $500 per month. The client has already
saved $3,500 for a down payment and is using an FHA Energy Efficient Mortgage
(EEM).
If the client wants to make the minimum down payment for a home priced at $150,000,
how much more does the client need to save?
-$1,750
-$2,250
-$4,500
-$5,250 - ✔✔$1,750
✔✔Under which condition would most down payment assistance programs approve a
waiver of the home-ownership education requirement?
-Most will not waive the home-ownership education requirement
-When the home-buyer has successfully passed a home-ownership exam
-When the home-buyer has a verifiable disability or handicap
-When the home-buyer has completed four years of college - ✔✔Most will not waive the
home-ownership education requirement
✔✔Which type of assistance administered by a public housing authority allows for
location flexibility?
-USDA
-FHA
-Project-based vouchers
-Tenant-based vouchers - ✔✔Tenant-based vouchers
✔✔A client's payment history affects which factor of creditworthiness?
-Collateral
-Capacity
, -Character
-Capital - ✔✔Character
✔✔Which action may a lender take to determine a borrower's character?
-Calculate housing ratios to see debt obligations.
-Examine pay stubs to determine amount of income.
-Review the appraisal.
-Call an employer to verify employment. - ✔✔Call an employer to verify employment.
✔✔A client is in the process of purchasing a home with a sales price of $162,000. The
client has a net worth of $50,000, a credit score of 680, and a debt-to-income ratio of
36%. The home has appraised for $155,000. Which factor of creditworthiness will most
likely be an obstacle to purchasing the home?
-Character
-Capital
-Collateral
-Capacity - ✔✔Collateral
✔✔When a lender inquires about how much money a borrower has saved for a down
payment on a home, what factor is being considered?
-Character
-Collateral
-Capital
-Capacity - ✔✔Capital
✔✔A first-time buyer wants a conventional loan but does not have the assets to qualify.
This client may have to purchase with an FHA loan unless the client saves more money.
Which of the Four C's of Credit does this involve?
-Capacity
-Character
-Capital
-Collateral - ✔✔Capital
✔✔Which describes a home-buyer who would be ineligible as a first-time home-buyer,
as defined by most down payment assistance programs?
A client who sold a home five years ago for a net profit.
A client who lost a home to foreclosure two years ago.
A client who leases out units in a cousin's rental property.
A client who lives in a home owned by the client's parents. - ✔✔
