Freddie Mac - Credit Smart ACTUAL EXAM
WITH CORRECT ANSWERS (WELL VERIFIED)
2026!
The percentage of your gross monthly income that goes toward paying for your housing expenses is
called the "housing expense ratio" and is based on the total housing payment, which includes: -
ANSWER⭐☑️Principal, interest, property taxes, homeowner's insurance, mortgage insurance,
homeowner's or condo association fees
Lenders don't include your future housing payment in your debt-to-income ratio, only all other
outstanding debts. - ANSWER⭐☑️False
The principal amount is the total amount borrowed. - ANSWER⭐☑️True
Do lenders use gross income or net profits when calculating mortgage affordability for self-employed
borrowers? - ANSWER⭐☑️Net profits
An escrow account is a special account managed by the borrower that holds funds for property taxes
and property insurance payments. - ANSWER⭐☑️False
Having adequate cash reserves demonstrates to your lender that you have responsibly managed your
money and have savings and other assets to fall back on in case of emergency. - ANSWER⭐☑️True
Capital - or cash to close - refers to the funds you need to save in order to cover the cost of down
payment and closing costs. - ANSWER⭐☑️True
Acceptable sources of capital include: - ANSWER⭐☑️Funds from a family member, funds from a down
payment assistance program or funds from your savings account
, Lenders consider investments to be (select all that apply): - ANSWER⭐☑️Lenders consider investments
to be IRAs, bonds, CDs, stocks and 401(k) plans.
To determine if you have adequate savings to obtain a mortgage and sustain homeownership, lenders
will average the last six months of your checking and savings account balances. - ANSWER⭐☑️False
Lenders consider four primary factors when determining whether to approve a loan - the 4 C's of
lending. What are they? - ANSWER⭐☑️Credit, Capacity, Capital and Collateral
Derogatory information on your credit report may include: collections, judgements, bankruptcies and/or
late payments. - ANSWER⭐☑️True
Lenders generally don't have any guidelines or restrictions when it comes to the home you want to
purchase or its condition, provided you have good credit. - ANSWER⭐☑️False
The home inspection is ordered through the lender and determines the market value of the home. -
ANSWER⭐☑️False
Manufactured homes are the same as mobile homes and don't need to meet federal construction and
safety standards. - ANSWER⭐☑️False
If you make extra payments on your loan, that can help pay down the principal faster and thus greatly
reduce the interest due on the loan. - ANSWER⭐☑️True
Government insured loans, such as FHA loans, are the only low down payment mortgages available to
homebuyers. - ANSWER⭐☑️False
A fixed-rate mortgage is a loan where the interest rate stays the same for the life of the loan. -
ANSWER⭐☑️True
Which of the following loans are guaranteed by the federal government (select all that apply): -
ANSWER⭐☑️VA, USDA, FHA
WITH CORRECT ANSWERS (WELL VERIFIED)
2026!
The percentage of your gross monthly income that goes toward paying for your housing expenses is
called the "housing expense ratio" and is based on the total housing payment, which includes: -
ANSWER⭐☑️Principal, interest, property taxes, homeowner's insurance, mortgage insurance,
homeowner's or condo association fees
Lenders don't include your future housing payment in your debt-to-income ratio, only all other
outstanding debts. - ANSWER⭐☑️False
The principal amount is the total amount borrowed. - ANSWER⭐☑️True
Do lenders use gross income or net profits when calculating mortgage affordability for self-employed
borrowers? - ANSWER⭐☑️Net profits
An escrow account is a special account managed by the borrower that holds funds for property taxes
and property insurance payments. - ANSWER⭐☑️False
Having adequate cash reserves demonstrates to your lender that you have responsibly managed your
money and have savings and other assets to fall back on in case of emergency. - ANSWER⭐☑️True
Capital - or cash to close - refers to the funds you need to save in order to cover the cost of down
payment and closing costs. - ANSWER⭐☑️True
Acceptable sources of capital include: - ANSWER⭐☑️Funds from a family member, funds from a down
payment assistance program or funds from your savings account
, Lenders consider investments to be (select all that apply): - ANSWER⭐☑️Lenders consider investments
to be IRAs, bonds, CDs, stocks and 401(k) plans.
To determine if you have adequate savings to obtain a mortgage and sustain homeownership, lenders
will average the last six months of your checking and savings account balances. - ANSWER⭐☑️False
Lenders consider four primary factors when determining whether to approve a loan - the 4 C's of
lending. What are they? - ANSWER⭐☑️Credit, Capacity, Capital and Collateral
Derogatory information on your credit report may include: collections, judgements, bankruptcies and/or
late payments. - ANSWER⭐☑️True
Lenders generally don't have any guidelines or restrictions when it comes to the home you want to
purchase or its condition, provided you have good credit. - ANSWER⭐☑️False
The home inspection is ordered through the lender and determines the market value of the home. -
ANSWER⭐☑️False
Manufactured homes are the same as mobile homes and don't need to meet federal construction and
safety standards. - ANSWER⭐☑️False
If you make extra payments on your loan, that can help pay down the principal faster and thus greatly
reduce the interest due on the loan. - ANSWER⭐☑️True
Government insured loans, such as FHA loans, are the only low down payment mortgages available to
homebuyers. - ANSWER⭐☑️False
A fixed-rate mortgage is a loan where the interest rate stays the same for the life of the loan. -
ANSWER⭐☑️True
Which of the following loans are guaranteed by the federal government (select all that apply): -
ANSWER⭐☑️VA, USDA, FHA
