HUD Practice Test and Correct Answers
2026
Which document is most important when working with a client to
develop an initial budget as part of a Client Action Plan? - ANSWER-
Pay Stub
A client would like to purchase a home within one year. The client is
motivated to increase household income as a way to save for a down
payment and qualify for a loan. Which is the
best solution for the client to reach this goal? - ANSWER-Find a
second job
A credit report may contain which information? - ANSWER-The
number of accounts in collection status
Six months ago a client left a job as a reporter to start a
business in the retail industry. To prepare to buy a house, the client
closed credit card accounts and has been using savings to
pay down credit card debt and collections. The client has not
been able to save much for a down payment with all the debt
payments but knows about an affordable homeownership
program that only requires a 1% down payment with an FHA
loan. What might result from the client closing the credit card
accounts? - ANSWER-It increases credit utilization, causing a negative
impact on the credit
score.
, HUD Practice Test and Correct Answers
2026
Which action would a client take to improve a credit score? -
ANSWER-Pay delinquent accounts
A client does not receive a written monthly statement from the credit
card company. Which credit law could this omission violate? -
ANSWER-Fair Credit Billing Act
A client shopping for a mortgage loan presents a housing counselor
with an offer from a local mortgage lender. The interest rate on the
offer is 7.5% for a 30-year fixed rate mortgage with a 20% down
payment required. The counselor reviews the client file and
determines the client's credit score is 725 and the client's total debt-
to-income ratio is 20%. - ANSWER-"I am unable to determine
whether the loan is predatory, but I suggest you shop around with
other lending sources."
Which action should a counselor recommend a client take first after
discovering identity theft? - ANSWER-File an identity theft report
In which situation would a client's responsibilities, recurring costs,
and upfront costs be evaluated? - ANSWER-When weighing housing
options
, HUD Practice Test and Correct Answers
2026
A client works 40 hours a week making $15 an hour. What is the
highest monthly mortgage the client can afford based on income if
the client secures a conventional loan? - ANSWER-$728
Which type of government insured loan was created for financing
homes in rural areas? - ANSWER-USDA
A client keeps having budget problems due to unexpected expenses.
Which financial tool would best assist this client to prepare for
unexpected expenses and avoid increasing credit usage? - ANSWER-
Emergency Funds
A client has a monthly household income of $2,300, monthly debt
payments of $450, and an optimal monthly housing ratio of 32%.
What is the client's optimal monthly housing payment? - ANSWER-
$736
Use Front-End Ratio
What is the back-end ratio for a client with a monthly housing
expense of $1,250, a monthly total of $88 in other consumer debt
payments, and a gross household income of $4,460 per month
(rounded to the nearest whole percent)? - ANSWER-30%
A client earns a salary of $45,000 at a job held for three years. The
client has credit card bills, student loans, and a car loan totaling $500
per month. The client has already saved $3,500 for a down payment
2026
Which document is most important when working with a client to
develop an initial budget as part of a Client Action Plan? - ANSWER-
Pay Stub
A client would like to purchase a home within one year. The client is
motivated to increase household income as a way to save for a down
payment and qualify for a loan. Which is the
best solution for the client to reach this goal? - ANSWER-Find a
second job
A credit report may contain which information? - ANSWER-The
number of accounts in collection status
Six months ago a client left a job as a reporter to start a
business in the retail industry. To prepare to buy a house, the client
closed credit card accounts and has been using savings to
pay down credit card debt and collections. The client has not
been able to save much for a down payment with all the debt
payments but knows about an affordable homeownership
program that only requires a 1% down payment with an FHA
loan. What might result from the client closing the credit card
accounts? - ANSWER-It increases credit utilization, causing a negative
impact on the credit
score.
, HUD Practice Test and Correct Answers
2026
Which action would a client take to improve a credit score? -
ANSWER-Pay delinquent accounts
A client does not receive a written monthly statement from the credit
card company. Which credit law could this omission violate? -
ANSWER-Fair Credit Billing Act
A client shopping for a mortgage loan presents a housing counselor
with an offer from a local mortgage lender. The interest rate on the
offer is 7.5% for a 30-year fixed rate mortgage with a 20% down
payment required. The counselor reviews the client file and
determines the client's credit score is 725 and the client's total debt-
to-income ratio is 20%. - ANSWER-"I am unable to determine
whether the loan is predatory, but I suggest you shop around with
other lending sources."
Which action should a counselor recommend a client take first after
discovering identity theft? - ANSWER-File an identity theft report
In which situation would a client's responsibilities, recurring costs,
and upfront costs be evaluated? - ANSWER-When weighing housing
options
, HUD Practice Test and Correct Answers
2026
A client works 40 hours a week making $15 an hour. What is the
highest monthly mortgage the client can afford based on income if
the client secures a conventional loan? - ANSWER-$728
Which type of government insured loan was created for financing
homes in rural areas? - ANSWER-USDA
A client keeps having budget problems due to unexpected expenses.
Which financial tool would best assist this client to prepare for
unexpected expenses and avoid increasing credit usage? - ANSWER-
Emergency Funds
A client has a monthly household income of $2,300, monthly debt
payments of $450, and an optimal monthly housing ratio of 32%.
What is the client's optimal monthly housing payment? - ANSWER-
$736
Use Front-End Ratio
What is the back-end ratio for a client with a monthly housing
expense of $1,250, a monthly total of $88 in other consumer debt
payments, and a gross household income of $4,460 per month
(rounded to the nearest whole percent)? - ANSWER-30%
A client earns a salary of $45,000 at a job held for three years. The
client has credit card bills, student loans, and a car loan totaling $500
per month. The client has already saved $3,500 for a down payment
