HUD Housing Counselor Certification Practice
Exam/ 127 Q&A.
A client wants to customize his home with do-it-yourself projects, this is an
indication the client is best aligned with which housing option; Home-ownership
or Renting? - Answer: Home-ownership
The client's gross monthly income is $4167 and the monthly debts are $435. What
is the maximum mortgage payment (rounded to the nearest dollar) for which this
client would qualify using a standard conventional loan? - Answer: $1,065
NOTE: The maximum front-end ratio for a standard conventional loan is 28%, and
the back-end ratio is 36%. The front-end ratio is calculated as 28% of the client's
monthly income of $4,167, which is $1,167. The back-end ratio is calculated as
36% of the
Page 1 of 52
,client's monthly income of $4,167 minus the client's monthly debt of $435, which
equals $1,065. Therefore, the maximum loan payment that the client qualifies for
is the lower of the two numbers, which is $1,065.
Which is the maximum debt-to-income ratio allowable for an FHA loan? - Answer:
43%
Which is the maximum debt-to-income ratio allowable for an FHA Energy
Efficiency Mortgage loan? - Answer: 45%
The client's gross monthly income is $4167 and the monthly debts are $435. With
a monthly mortgage payment of $950, which is the client's debt-to-income ratio
(round to the nearest whole percent)? - Answer: 33%
The client's gross monthly income is $4167 and the monthly debts are $435. If the
client seeks an FHA Energy Efficient Mortgage (EEM) loan, what is the maximum
housing payment for which he can qualify (rounded to the nearest dollar)? -
Answer: $1,292
On which factor is a borrower's annual mortgage insurance premium (MIP) based?
- Answer: Current principal balance
NOTE: The annual mortgage insurance premium (MIP) is based on the unpaid
principal balance of the loan. The loan-to-value ratio is used to determine when
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,private mortgage insurance (PMI) can be dropped from the loan. Credit scores do
not affect MIP but might affect PMI.
Which is the upfront mortgage insurance premium (UFMIP) if the client purchases
a home with an FHA loan amount of $116,000? - Answer: $2,030
The client only tracks bill payments. Which should the housing counselor
recommend to help the client begin
planning for a home purchase?
A- Continue to track bill payments only
B- Track income only
C- Track all income and expenses
D- Track savings deposits and expenses - Answer: C- Track all income and
expenses
How should a client apply for the Housing Choice Voucher Program? - Answer:
Contact the local Public Housing Authority
Which website provides information on programs to assist home-buyers with
down payment assistance? - Answer: HUD.gov
Based on the client's income of $56,400 per year of, savings of 12,000 toward a
down payment, and credit score of 700, which mortgage option is likely best for
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, her; Conventional loan, FHA loan, USDA Rural Development loan, or Subprime
loan? - Answer: Conventional loan
This client is denied a loan to purchase a home because she has not lived in the
country for at least ten years. Which Act is this adverse action violating, and
where should the client report this action to? - Answer: Report the action to the
Federal Trade Commission, it is a violation of the Equal Credit Opportunity Act
If the client submits a loan application, which document should she receive within
three business days? - Answer: Loan Estimate
What is a pre-approval from a lender? - Answer: When the lender commits to
lend a fixed amount based on a review of the client's application.
A client has been a paralegal for five years and earns $56,400 per year. She has
been working part-time at an ice cream parlor for the past few summers to save
for her first home. Now that she has saved $12,000 toward a down payment, she
no longer needs to work a second job. In the next three months, the client would
like to buy a single-family home near a good school for less than $150,000.
Does this client meet a lender's expectation for continued employment? -
Answer: Yes, because the client has been at her job over two years
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Exam/ 127 Q&A.
A client wants to customize his home with do-it-yourself projects, this is an
indication the client is best aligned with which housing option; Home-ownership
or Renting? - Answer: Home-ownership
The client's gross monthly income is $4167 and the monthly debts are $435. What
is the maximum mortgage payment (rounded to the nearest dollar) for which this
client would qualify using a standard conventional loan? - Answer: $1,065
NOTE: The maximum front-end ratio for a standard conventional loan is 28%, and
the back-end ratio is 36%. The front-end ratio is calculated as 28% of the client's
monthly income of $4,167, which is $1,167. The back-end ratio is calculated as
36% of the
Page 1 of 52
,client's monthly income of $4,167 minus the client's monthly debt of $435, which
equals $1,065. Therefore, the maximum loan payment that the client qualifies for
is the lower of the two numbers, which is $1,065.
Which is the maximum debt-to-income ratio allowable for an FHA loan? - Answer:
43%
Which is the maximum debt-to-income ratio allowable for an FHA Energy
Efficiency Mortgage loan? - Answer: 45%
The client's gross monthly income is $4167 and the monthly debts are $435. With
a monthly mortgage payment of $950, which is the client's debt-to-income ratio
(round to the nearest whole percent)? - Answer: 33%
The client's gross monthly income is $4167 and the monthly debts are $435. If the
client seeks an FHA Energy Efficient Mortgage (EEM) loan, what is the maximum
housing payment for which he can qualify (rounded to the nearest dollar)? -
Answer: $1,292
On which factor is a borrower's annual mortgage insurance premium (MIP) based?
- Answer: Current principal balance
NOTE: The annual mortgage insurance premium (MIP) is based on the unpaid
principal balance of the loan. The loan-to-value ratio is used to determine when
Page 2 of 52
,private mortgage insurance (PMI) can be dropped from the loan. Credit scores do
not affect MIP but might affect PMI.
Which is the upfront mortgage insurance premium (UFMIP) if the client purchases
a home with an FHA loan amount of $116,000? - Answer: $2,030
The client only tracks bill payments. Which should the housing counselor
recommend to help the client begin
planning for a home purchase?
A- Continue to track bill payments only
B- Track income only
C- Track all income and expenses
D- Track savings deposits and expenses - Answer: C- Track all income and
expenses
How should a client apply for the Housing Choice Voucher Program? - Answer:
Contact the local Public Housing Authority
Which website provides information on programs to assist home-buyers with
down payment assistance? - Answer: HUD.gov
Based on the client's income of $56,400 per year of, savings of 12,000 toward a
down payment, and credit score of 700, which mortgage option is likely best for
Page 3 of 52
, her; Conventional loan, FHA loan, USDA Rural Development loan, or Subprime
loan? - Answer: Conventional loan
This client is denied a loan to purchase a home because she has not lived in the
country for at least ten years. Which Act is this adverse action violating, and
where should the client report this action to? - Answer: Report the action to the
Federal Trade Commission, it is a violation of the Equal Credit Opportunity Act
If the client submits a loan application, which document should she receive within
three business days? - Answer: Loan Estimate
What is a pre-approval from a lender? - Answer: When the lender commits to
lend a fixed amount based on a review of the client's application.
A client has been a paralegal for five years and earns $56,400 per year. She has
been working part-time at an ice cream parlor for the past few summers to save
for her first home. Now that she has saved $12,000 toward a down payment, she
no longer needs to work a second job. In the next three months, the client would
like to buy a single-family home near a good school for less than $150,000.
Does this client meet a lender's expectation for continued employment? -
Answer: Yes, because the client has been at her job over two years
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