HUD COUNSELOR EXAM 200 QUESTIONS AND

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HUD COUNSELOR EXAM QUESTIONS

AND CORRECT DETAILED ANSWERS

WITH RATIONALES UPDATE

• If this client obtains a mortgage of $100,000, typically, how much should

he expect to pay for closing costs?

• $0 to $500
• $500 to $1,500
• $3,000 to $4,000
• $8,000 to $10,000

Correct Answer: C - $3,000 to $4,000

• Is an Application Fee an upfront cost of clients who are considering

renting or buying a property?

• Renting
• Buying
• Both Renting and Buying
• Neither

Correct Answer: A - 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?

• Renting
• Home-ownership
• Leasing
• Co-op housing

Correct Answer: B - Home-ownership

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• The client's gross monthly income is $4,167 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?

A. $950

B. $1,065

C. $1,167

D. $1,250

*Correct Answer: B - $1,065*

Note: The maximum front-end ratio for a standard conventional loan is 28%

($1,167), and the back-end ratio is 36% ($1,500 - $435 = $1,065). The client qualifies for the lower of the two.

• Which is the maximum debt-to-income ratio allowable for an FHA loan?

A. 28%

B. 36%

C. 43%

D. 50%

Correct Answer: C - 43%

• Which is the maximum debt-to-income ratio allowable for an FHA

Energy Efficiency Mortgage loan?

A. 31%

B. 41%

C. 43%

D. 45%

Correct Answer: D - 45%

• The client's gross monthly income is $4,167 and the monthly debts are

$435. With a monthly mortgage payment of $950, what is the client's debt- to-income ratio (round to the nearest whole percent)?

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A. 28%

B. 33%

C. 36%

D. 43%

Correct Answer: B - 33%

• The client's gross monthly income is $4,167 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)?

A. $1,065

B. $1,150

C. $1,292

D. $1,400

Correct Answer: C - $1,292

• On which factor is a borrower's annual mortgage insurance premium

(MIP) based?

• Credit score
• Appraised value of the home
• Current principal balance
• Original loan amount

Correct Answer: C - Current principal balance

Note: The annual MIP is based on the unpaid principal balance. Credit scores

do not affect MIP but might affect PMI.

• What is the upfront mortgage insurance premium (UFMIP) if the client

purchases a home with an FHA loan amount of $116,000?

A. $1,160

B. $1,750

C. $2,030

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D. $3,500

Correct Answer: C - $2,030

• What is the maximum percent of area median income allowable for a

household to qualify for a Housing Choice Voucher?

A. 30%

B. 50%

C. 80%

D.

Correct Answer: B - 50%

• Which is the maximum recommended housing ratio for renting an

apartment?

A. 25%

B. 28%

C. 30%

D. 35%

Correct Answer: C - 30%

• Eligibility requirements for down-payment assistance programs include

which factors?

• Income, home-buyer education, purchase price
• Credit score, age of borrower, family size
• Purchase price, neighborhood, type of car owned
• Income, credit score, current rental payment

Correct Answer: A - 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?

A. 0.85%

B. 1.00%