HUD CERTIFICATION 2026 EXAM QUESTIONS AND
ANSWERS GRADED A+
✔✔Capacity - ✔✔Lender considers consistency of employment and income, adequacy
of income to repay debt, recurring debts and frequency and type of wages
✔✔Capital - ✔✔Lenders inquire about how much money a borrower has saved to pay a
deposit or down payment for the home intended to purchase.
✔✔Collateral - ✔✔Lenders often request a borrower to pledge specific property or
assets as collateral to secure repayment of loan.
✔✔Front-end ratio for obtaining a conventional loan - ✔✔28%
✔✔Front-end ratio for obtaining an FHA loan - ✔✔31%
✔✔Affordable front-end ratio for renters - ✔✔30%
✔✔Per FHA, you are considered self-employed if you have ___% or greater ownership
interest in a business. - ✔✔25%
✔✔Subprime Mortgage Loans - ✔✔A type of mortgage with less stringent lending and
underwriting terms and conditions, usually offered to borrowers with blemished or
limited credit histories.
✔✔Type of mortgage that is a good fit for those that have limited funds for a down
payment and closing costs - ✔✔FHA Mortgage
✔✔Type of loan that may be a good fit for those that have a poor credit history and/or
are ineligible for other loans - ✔✔Subprime Mortgage Loan
✔✔Type of mortgage may be a good fit for eligible veterans, suitable credit and
sufficient income and have a certificate of eligibility. - ✔✔VA Loan
✔✔Type of mortgage may be a good fit for those who want to live in eligible rural areas,
make less than 115% AMI, need flexible credit guidelines, may not have funds for a DP
- ✔✔USDA Loan
✔✔The midpoint in the family income range for a metropolitan statistical area of for the
non-metropolitan parts of a state - ✔✔Area Median Income
✔✔Fixed Rate Mortgage - ✔✔Typically paid off in 30 years, has an interest rate that
doesn't fluctuate.
, ✔✔Adjustable Rate Mortgage - ✔✔Have an initial interest rate that applies for a defined
period of time and then adjusts at a pre-determined intervals for the life of the loan.
✔✔Second Mortgage - ✔✔A subordinate loan on a property
✔✔Loan-to-Value Ratio - ✔✔A percentage calculated by dividing the amount of the
outstanding loan amount by the sales price or appraised value of the home
✔✔When must your lender terminate PMI? - ✔✔78% or at midpoint of the loan. You can
request earlier once principal balance falls below 80% of original loan value
✔✔HOME Investment Partnership Program - ✔✔HUD program that provides grants to
states and localities for building, buying, and/or rehabilitating affordable housing for rent
or homeownership or providing direct rental assistance to low-income people.
✔✔Community Development Block Grant Program - ✔✔HUD program that provides
grants to states and localities to provide decent housing and a suitable living
environment and to expand economic opportunities, principally for low-and-moderate
income persons
✔✔Public Housing Agencies - ✔✔A state, county, municipality, or other government
agency that develops or operates low-income housing.
✔✔Fair Market Rent - ✔✔A determination of the monthly rent of a rental property,
calculated by HUD. Factored by geography and unit size, sets payment standards for
public housing programs
✔✔Housing Choice Voucher - ✔✔Commonly referred to as Section 8; distributed locally
by PHAs where you are free to choose any housing that meets program requirements
✔✔Project Based Voucher - ✔✔Allows PHAs to allocate up to 20% of its housing choice
vouchers for project-based vouchers attached to specific housing units
✔✔If client has a project based voucher and moves out of the unit, do they lose the
voucher assitance? - ✔✔Yes
✔✔What is the purpose for the Veterans Affairs Supportive Housing (VASH) program -
✔✔To end veterans homelessness
✔✔What is the purpose of the Housing Opportunities for Persons with AIDS (HOPWA)
program - ✔✔To assist with housing needs of people living with HIV/AIDS
ANSWERS GRADED A+
✔✔Capacity - ✔✔Lender considers consistency of employment and income, adequacy
of income to repay debt, recurring debts and frequency and type of wages
✔✔Capital - ✔✔Lenders inquire about how much money a borrower has saved to pay a
deposit or down payment for the home intended to purchase.
✔✔Collateral - ✔✔Lenders often request a borrower to pledge specific property or
assets as collateral to secure repayment of loan.
✔✔Front-end ratio for obtaining a conventional loan - ✔✔28%
✔✔Front-end ratio for obtaining an FHA loan - ✔✔31%
✔✔Affordable front-end ratio for renters - ✔✔30%
✔✔Per FHA, you are considered self-employed if you have ___% or greater ownership
interest in a business. - ✔✔25%
✔✔Subprime Mortgage Loans - ✔✔A type of mortgage with less stringent lending and
underwriting terms and conditions, usually offered to borrowers with blemished or
limited credit histories.
✔✔Type of mortgage that is a good fit for those that have limited funds for a down
payment and closing costs - ✔✔FHA Mortgage
✔✔Type of loan that may be a good fit for those that have a poor credit history and/or
are ineligible for other loans - ✔✔Subprime Mortgage Loan
✔✔Type of mortgage may be a good fit for eligible veterans, suitable credit and
sufficient income and have a certificate of eligibility. - ✔✔VA Loan
✔✔Type of mortgage may be a good fit for those who want to live in eligible rural areas,
make less than 115% AMI, need flexible credit guidelines, may not have funds for a DP
- ✔✔USDA Loan
✔✔The midpoint in the family income range for a metropolitan statistical area of for the
non-metropolitan parts of a state - ✔✔Area Median Income
✔✔Fixed Rate Mortgage - ✔✔Typically paid off in 30 years, has an interest rate that
doesn't fluctuate.
, ✔✔Adjustable Rate Mortgage - ✔✔Have an initial interest rate that applies for a defined
period of time and then adjusts at a pre-determined intervals for the life of the loan.
✔✔Second Mortgage - ✔✔A subordinate loan on a property
✔✔Loan-to-Value Ratio - ✔✔A percentage calculated by dividing the amount of the
outstanding loan amount by the sales price or appraised value of the home
✔✔When must your lender terminate PMI? - ✔✔78% or at midpoint of the loan. You can
request earlier once principal balance falls below 80% of original loan value
✔✔HOME Investment Partnership Program - ✔✔HUD program that provides grants to
states and localities for building, buying, and/or rehabilitating affordable housing for rent
or homeownership or providing direct rental assistance to low-income people.
✔✔Community Development Block Grant Program - ✔✔HUD program that provides
grants to states and localities to provide decent housing and a suitable living
environment and to expand economic opportunities, principally for low-and-moderate
income persons
✔✔Public Housing Agencies - ✔✔A state, county, municipality, or other government
agency that develops or operates low-income housing.
✔✔Fair Market Rent - ✔✔A determination of the monthly rent of a rental property,
calculated by HUD. Factored by geography and unit size, sets payment standards for
public housing programs
✔✔Housing Choice Voucher - ✔✔Commonly referred to as Section 8; distributed locally
by PHAs where you are free to choose any housing that meets program requirements
✔✔Project Based Voucher - ✔✔Allows PHAs to allocate up to 20% of its housing choice
vouchers for project-based vouchers attached to specific housing units
✔✔If client has a project based voucher and moves out of the unit, do they lose the
voucher assitance? - ✔✔Yes
✔✔What is the purpose for the Veterans Affairs Supportive Housing (VASH) program -
✔✔To end veterans homelessness
✔✔What is the purpose of the Housing Opportunities for Persons with AIDS (HOPWA)
program - ✔✔To assist with housing needs of people living with HIV/AIDS
