HUD Housing Counselor Certification Practice Exam Questions & Answers 2023/2024
What is the maximum percent of area median income allowable for a household to qualify for a Housing Choice Voucher? - ANSWER-50%
Which is the maximum recommended housing ratio for renting an apartment? - ANSWER-30%
Eligibility requirements for down-payment assistance programs include which factors? - ANSWER-
Income, home-buyer education, purchase price
The client is considering an FHA mortgage. What is the upfront mortgage insurance premium (UFMIP) for
an
FHA mortgage? - ANSWER-1.75%
If the client was denied a mortgage loan and the lender told him to come back after his divorce had been
final for three years, what is the best advice for the housing counselor to provide to the client to report a
violation to ECOA? - ANSWER-Contact the Federal Trade Commission as the lender's action might violate the Equal Credit Opportunity Act
A question from a lender on the client's Medical History would be inappropriate or appropriate? - ANSWER-Inappropriate
Who is responsible for educating home-buyers about their rights? - ANSWER-Housing Counselor
In order to minimize the impact on the client's credit score, what is the maximum time frame within which the client should apply for pre-approval from multiple lenders? - ANSWER-A 30-day period
What are the responsibilities of a home inspector? - ANSWER-Examine mechanical systems, Evaluate the condition of a home, Identify items to be repaired or replaced Which is the best reason that a housing counselor would suggest that a client speak to three to five different lenders? - ANSWER-To compare loan estimates
Which is the best advice that a housing counselor can give the client to protect against identity theft? - ANSWER-Review credit report at least once per year
The client tells the lender that he is expecting a raise soon. Should the Lender provide a Loan Estimate (LE) with, or without factoring the raise? - ANSWER-Provide a loan estimate without factoring in the raise
If this client obtains a mortgage of $100,000, typically, how much should he expect to pay for closing costs? - ANSWER-$3000 to $4000
Is Application Fee an upfront cost of clients who are considering renting or buying a property? - ANSWER-Renting
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
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 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 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
In reviewing a loan estimate, the housing counselor finds fees for services that seem unnecessary. What is the most likely explanation for these fees? Choose one:
A- Predatory lending practices
B- Subprime mortgage terms
C- Regional lending considerations
D- Variation in lending practices - ANSWER-A- Predatory lending practices
What is the maximum percent of area median income allowable for a household to qualify for a Housing Choice Voucher? - ANSWER-50%
Which is the maximum recommended housing ratio for renting an apartment? - ANSWER-30%
Eligibility requirements for down-payment assistance programs include which factors? - ANSWER-
Income, home-buyer education, purchase price
The client is considering an FHA mortgage. What is the upfront mortgage insurance premium (UFMIP) for
an
FHA mortgage? - ANSWER-1.75%
If the client was denied a mortgage loan and the lender told him to come back after his divorce had been
final for three years, what is the best advice for the housing counselor to provide to the client to report a
violation to ECOA? - ANSWER-Contact the Federal Trade Commission as the lender's action might violate the Equal Credit Opportunity Act
A question from a lender on the client's Medical History would be inappropriate or appropriate? - ANSWER-Inappropriate
Who is responsible for educating home-buyers about their rights? - ANSWER-Housing Counselor
In order to minimize the impact on the client's credit score, what is the maximum time frame within which the client should apply for pre-approval from multiple lenders? - ANSWER-A 30-day period
What are the responsibilities of a home inspector? - ANSWER-Examine mechanical systems, Evaluate the condition of a home, Identify items to be repaired or replaced Which is the best reason that a housing counselor would suggest that a client speak to three to five different lenders? - ANSWER-To compare loan estimates
Which is the best advice that a housing counselor can give the client to protect against identity theft? - ANSWER-Review credit report at least once per year
The client tells the lender that he is expecting a raise soon. Should the Lender provide a Loan Estimate (LE) with, or without factoring the raise? - ANSWER-Provide a loan estimate without factoring in the raise
If this client obtains a mortgage of $100,000, typically, how much should he expect to pay for closing costs? - ANSWER-$3000 to $4000
Is Application Fee an upfront cost of clients who are considering renting or buying a property? - ANSWER-Renting
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
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 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 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
In reviewing a loan estimate, the housing counselor finds fees for services that seem unnecessary. What is the most likely explanation for these fees? Choose one:
A- Predatory lending practices
B- Subprime mortgage terms
C- Regional lending considerations
D- Variation in lending practices - ANSWER-A- Predatory lending practices
