HUD PRACTICE EXAM QUESTIONS
AND ANSWERS
Which\document\is\most\important\when\working\with\a\client\to\develop\an\initial\budget\
as\part\of\a\Client\Action\Plan?\-\ans✔List\of\Assets
Retirement\plan\statement
Pay\stub\X
Current\lease
A\client\would\like\purchase\a\home\within\one\year.\The\client\is\motivated\to\increase\
household\income\as\a\way\to\save\for\a\down\payment\and\qualify\for\a\loan.\Which\is\
the\best\solution\for\the\client\to\reach\this\goal?\-\ans✔
A\credit\report\may\contain\which\information?\-\ans✔Income\history\
Criminal\record
#\of\accounts\in\collection\status\
A\history\of\payments\on\an\elctric\bill
A\credit\report\contains\inaccurate\information.\Which\action\item\should\the\counselor\
include\in\the\Client\Action\Plan?\-\ans✔FIle\a\dispute\with\the\appropaite\credit\reporting\
agency
Six\months\ago\a\client\left\a\job\as\a\reporter\to\start\a\business\in\the\retail\industry.\To\
prepare\to\buy\a\house,\the\client\closed\credit\card\accounts\and\has\been\using\savings\
to\pay\down\credit\card\debt\and\collections.\The\client\has\not\been\able\to\save\much\for\
a\down\payment\with\all\the\debt\payments\but\knows\about\an\affordable\
homeownership\program\that\only\requires\a\1%\down\payment\with\an\FHA\loan.
What\might\result\from\the\client\closing\the\credit\card\accounts?\-\ans✔
Which\action\would\a\client\take\to\improve\a\credit\score?\-\ans✔
A\client\does\not\receive\a\written\monthly\statement\from\the\credit\card\company.\Which\
credit\law\could\this\omission\violate?\-\ans✔FCBA
A\client\shopping\for\a\mortgage\loan\presents\a\housing\counselor\with\an\offer\from\a\
local\mortgage\lender.\The\interest\rate\on\the\offer\is\7.5%\for\a\30-year\fixed\rate\
mortgage\with\a\20%\down\payment\required.\The\counselor\reviews\the\client\file\and\
determines\the\client's\credit\score\is\725\and\the\client's\total\debt-to-income\ratio\is\20%.
, The\client\asks\the\housing\counselor\if\the\offer\is\a\case\of\illegal\predatory\lending.\How\
should\the\housing\counselor\respond?\-\ans✔I\am\unable\to\determine\whether\the\loan\
is\predatory\but\i\suggest\you\shop\around\with\other\ledning\sources
Which\action\should\a\counselor\recommend\a\client\take\first\after\discovering\identity\
theft?\-\ans✔File\an\identity\theft\report
In\which\situation\would\a\client's\responsibilities,\recurring\costs,\and\upfront\costs\be\
evaluated?\-\ans✔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?\-\
ans✔Front\End\Ratio\Formula
Conventional\=\<28%
Which\type\of\government\insured\loan\was\created\for\financing\homes\in\rural\areas?\-\
ans✔USDA
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?\-\ans✔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?\-\ans✔Front\End\Ratio\Formula
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)?\-\ans✔Debt\to\income\ratio\or\
back\end\ratio
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?\-\ans✔FHA\downpayment\is\at\least\3.5%
Under\which\condition\would\most\down\payment\assistance\programs\approve\a\waiver\
of\the\homeownership\education\requirement?\-\ans✔Most\will\not\waive\the\
homeownership\education\requirement
Which\type\of\assistance\administered\by\a\public\housing\authority\allows\for\location\
flexibility?\-\ans✔Project\based\vouchers\2.2-23
AND ANSWERS
Which\document\is\most\important\when\working\with\a\client\to\develop\an\initial\budget\
as\part\of\a\Client\Action\Plan?\-\ans✔List\of\Assets
Retirement\plan\statement
Pay\stub\X
Current\lease
A\client\would\like\purchase\a\home\within\one\year.\The\client\is\motivated\to\increase\
household\income\as\a\way\to\save\for\a\down\payment\and\qualify\for\a\loan.\Which\is\
the\best\solution\for\the\client\to\reach\this\goal?\-\ans✔
A\credit\report\may\contain\which\information?\-\ans✔Income\history\
Criminal\record
#\of\accounts\in\collection\status\
A\history\of\payments\on\an\elctric\bill
A\credit\report\contains\inaccurate\information.\Which\action\item\should\the\counselor\
include\in\the\Client\Action\Plan?\-\ans✔FIle\a\dispute\with\the\appropaite\credit\reporting\
agency
Six\months\ago\a\client\left\a\job\as\a\reporter\to\start\a\business\in\the\retail\industry.\To\
prepare\to\buy\a\house,\the\client\closed\credit\card\accounts\and\has\been\using\savings\
to\pay\down\credit\card\debt\and\collections.\The\client\has\not\been\able\to\save\much\for\
a\down\payment\with\all\the\debt\payments\but\knows\about\an\affordable\
homeownership\program\that\only\requires\a\1%\down\payment\with\an\FHA\loan.
What\might\result\from\the\client\closing\the\credit\card\accounts?\-\ans✔
Which\action\would\a\client\take\to\improve\a\credit\score?\-\ans✔
A\client\does\not\receive\a\written\monthly\statement\from\the\credit\card\company.\Which\
credit\law\could\this\omission\violate?\-\ans✔FCBA
A\client\shopping\for\a\mortgage\loan\presents\a\housing\counselor\with\an\offer\from\a\
local\mortgage\lender.\The\interest\rate\on\the\offer\is\7.5%\for\a\30-year\fixed\rate\
mortgage\with\a\20%\down\payment\required.\The\counselor\reviews\the\client\file\and\
determines\the\client's\credit\score\is\725\and\the\client's\total\debt-to-income\ratio\is\20%.
, The\client\asks\the\housing\counselor\if\the\offer\is\a\case\of\illegal\predatory\lending.\How\
should\the\housing\counselor\respond?\-\ans✔I\am\unable\to\determine\whether\the\loan\
is\predatory\but\i\suggest\you\shop\around\with\other\ledning\sources
Which\action\should\a\counselor\recommend\a\client\take\first\after\discovering\identity\
theft?\-\ans✔File\an\identity\theft\report
In\which\situation\would\a\client's\responsibilities,\recurring\costs,\and\upfront\costs\be\
evaluated?\-\ans✔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?\-\
ans✔Front\End\Ratio\Formula
Conventional\=\<28%
Which\type\of\government\insured\loan\was\created\for\financing\homes\in\rural\areas?\-\
ans✔USDA
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?\-\ans✔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?\-\ans✔Front\End\Ratio\Formula
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)?\-\ans✔Debt\to\income\ratio\or\
back\end\ratio
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?\-\ans✔FHA\downpayment\is\at\least\3.5%
Under\which\condition\would\most\down\payment\assistance\programs\approve\a\waiver\
of\the\homeownership\education\requirement?\-\ans✔Most\will\not\waive\the\
homeownership\education\requirement
Which\type\of\assistance\administered\by\a\public\housing\authority\allows\for\location\
flexibility?\-\ans✔Project\based\vouchers\2.2-23
