HUD Exam - Housing Affordability 2026
Questions and Answers
All of the following are true statements about upfront costs associated with renting
and buying, except;
A. Renters generally pay a security deposit upon signing a lease.
B. The average cost due upon signing a lease for a rental is typically between 20%
of the monthly rent..
C. Closing costs are typically comprised of lender fees, discount points, title
insurance, home inspection fees, escrow deposit, property taxes, private mortgage
insurance, and attorney's fees.
D. A client who desires to purchase a home worth $150,000 could be required to
pay $7,000 in standard closing costs. - Correct answer-B. The average costs due
upon signing a lease for a rental is typically 20% of the monthly rent.
-This statement is not true. However, the figure of 20% is relevant for those
considering buying a home (down payment).
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, A couple, the Smiths, recently scheduled a meeting with Rebecca. They have
owned their home for seven years and have accumulated some equity in the home.
However, they are now struggling to pay their mortgage, because the wife left her
full-time job when she had a baby. Her husband's salary is paid in installments of
$900 a week, which are subject to deductions and other withholdings. Each month,
they pay $1,000 in principal and interest, $110 for taxes, $130 for insurance, and
$20 in homeowners assessments. What is their current front-end ratio (as a whole
number with no decimal point)? - Correct answer-32%
Formula: Gross monthly income = Total weekly pay before deuctions x
Front end ratio = Monthly housing expenses / Gross monthly Income.
One option that Rebecca suggests to the Smiths is to sell their home and rent a
home that is smaller and more affordable. If the Smiths decide to do this, they will
no longer have a mortgage, so what is the maximum amount that they can afford to
pay in rent and renters insurance each month? Tip: Recall that the husband 's salary
is paid in installments of $900 a week, which are subject to deductions and other
withholdings. - Correct answer-$1,170
If the Smiths sell their home and purchase a more affordable property, what is the
maximum amount that is affordable for the Smiths to pay in PITIA each month if
©COPYRIGHT 2025 ALL RIGHTS RESERVED 2
Questions and Answers
All of the following are true statements about upfront costs associated with renting
and buying, except;
A. Renters generally pay a security deposit upon signing a lease.
B. The average cost due upon signing a lease for a rental is typically between 20%
of the monthly rent..
C. Closing costs are typically comprised of lender fees, discount points, title
insurance, home inspection fees, escrow deposit, property taxes, private mortgage
insurance, and attorney's fees.
D. A client who desires to purchase a home worth $150,000 could be required to
pay $7,000 in standard closing costs. - Correct answer-B. The average costs due
upon signing a lease for a rental is typically 20% of the monthly rent.
-This statement is not true. However, the figure of 20% is relevant for those
considering buying a home (down payment).
©COPYRIGHT 2025 ALL RIGHTS RESERVED 1
, A couple, the Smiths, recently scheduled a meeting with Rebecca. They have
owned their home for seven years and have accumulated some equity in the home.
However, they are now struggling to pay their mortgage, because the wife left her
full-time job when she had a baby. Her husband's salary is paid in installments of
$900 a week, which are subject to deductions and other withholdings. Each month,
they pay $1,000 in principal and interest, $110 for taxes, $130 for insurance, and
$20 in homeowners assessments. What is their current front-end ratio (as a whole
number with no decimal point)? - Correct answer-32%
Formula: Gross monthly income = Total weekly pay before deuctions x
Front end ratio = Monthly housing expenses / Gross monthly Income.
One option that Rebecca suggests to the Smiths is to sell their home and rent a
home that is smaller and more affordable. If the Smiths decide to do this, they will
no longer have a mortgage, so what is the maximum amount that they can afford to
pay in rent and renters insurance each month? Tip: Recall that the husband 's salary
is paid in installments of $900 a week, which are subject to deductions and other
withholdings. - Correct answer-$1,170
If the Smiths sell their home and purchase a more affordable property, what is the
maximum amount that is affordable for the Smiths to pay in PITIA each month if
©COPYRIGHT 2025 ALL RIGHTS RESERVED 2
