HUD HOUSING COUNSELOR CERTIFICATION
PRACTICE 2026 COMPREHENSIVE REVIEW
GUIDE Q&A
◉ Discount points. Answer: A fee charged by the lender at
settlement that results in increasing the lender's effective yield on
the money borrowed. One discount point equals one percent of the
loan amount.
◉ Default. Answer: failure to pay back a loan - mortgage loans are
typically considered in default when a payment has not been made
after 60 - 90 days.
◉ Escrow. Answer: Funds to be used for specific purposes by parties
carrying out a mutual transaction, deposited with a third party.
Commonly used by lenders to allocate funds for a homeowner's
property taxes, insurance premiums, or other fees when they
become due.
◉ Down Payment. Answer: A cash payment that home buyers are
typically required to pay when closing on a home loan which
represents a percentage of the total price of the home.
,◉ Closing Costs. Answer: Fees for final property transfer that are not
included in the price of the property. Typical closing costs can
include loan origination fees, discount points, appraisal fee, survey,
title insurance, legal fees, prepayment of taxes and insurance, etc.
◉ Range of closing costs. Answer: 3 to 4% of the purchase price of
the home.
◉ Homeowners Insurance. Answer: An insurance policy that can
provide coverage for damages to a dwelling and contents that belong
to the homeowner. Additionally, it can offer protection to
homeowners against losses resulting from liability claims from
accidents occurring on the property. Homeowners insurance is
mandatory for most homeowners with mortgages to obtain.
◉ Ben obtains a mortgage for $90,000, which is the most likely
amount that he will pay for closing costs?
-$1,000
-$3,500
-$7,000
-$10,000. Answer: $3,500
◉ Front-End Ratio. Answer: A rate that calculates a borrower's
housing-related obligations as a percentage of gross monthly
,income. Frequently used by lenders to qualify borrowers for a
mortgage. Also called a housing ratio.
◉ Conventional Loan. Answer: A mortgage loan backed by private
lenders. Though not insured by any government program, such as
the FHA or VA, loans with a down payment less than 20% of the
purchase price may require private mortgage insurance.
◉ Conventional loan ratios. Answer: 28/36%
◉ FHA Mortgage ratios. Answer: 31/43%
◉ Renters ratios. Answer: 30/36%
◉ PITIA. Answer: Principal, interest, taxes, Insurance, association
dues
◉ Principal. Answer: The amount of money borrowed to buy a house
or the amount of the loan that has not been paid back to the lender.
◉ Interest. Answer: Interest is the interest rate the bank charges you
for borrowing their money.
, ◉ Taxes. Answer: Property taxes charged by the county in which
your home is located. Proceeds pay for education, law enforcement,
and other services. These are mandatory and typically costs 1% of
the value annually
◉ Mortgage insurance premium (MIP). Answer: a monthly payment
-usually part of the mortgage payment - paid by a borrower for
mortgage insurance.
◉ Private Mortgage insurance (PMI). Answer: insurance policy that
protects the mortgage lender from loss in the event the borrower
defaults on the loan; typically required by lenders when the down
payment is less than 20%
◉ Association Dues. Answer: Charged by community or
Homeowners Association to pay for repairs, upkeep, landscaping,
improvements, and property management
◉ Ground Rent. Answer: An arrangement in which the owner of a
dwelling or structure does not own the land on which the structure
resides. In such cases, the borrower takes out a mortgage to
purchase the dwelling, but must still pay rent for the land.
◉ Hourly gross monthly income calculation. Answer: total hourly
pay before deductions x hours per week x 52 weeks per year / 12
PRACTICE 2026 COMPREHENSIVE REVIEW
GUIDE Q&A
◉ Discount points. Answer: A fee charged by the lender at
settlement that results in increasing the lender's effective yield on
the money borrowed. One discount point equals one percent of the
loan amount.
◉ Default. Answer: failure to pay back a loan - mortgage loans are
typically considered in default when a payment has not been made
after 60 - 90 days.
◉ Escrow. Answer: Funds to be used for specific purposes by parties
carrying out a mutual transaction, deposited with a third party.
Commonly used by lenders to allocate funds for a homeowner's
property taxes, insurance premiums, or other fees when they
become due.
◉ Down Payment. Answer: A cash payment that home buyers are
typically required to pay when closing on a home loan which
represents a percentage of the total price of the home.
,◉ Closing Costs. Answer: Fees for final property transfer that are not
included in the price of the property. Typical closing costs can
include loan origination fees, discount points, appraisal fee, survey,
title insurance, legal fees, prepayment of taxes and insurance, etc.
◉ Range of closing costs. Answer: 3 to 4% of the purchase price of
the home.
◉ Homeowners Insurance. Answer: An insurance policy that can
provide coverage for damages to a dwelling and contents that belong
to the homeowner. Additionally, it can offer protection to
homeowners against losses resulting from liability claims from
accidents occurring on the property. Homeowners insurance is
mandatory for most homeowners with mortgages to obtain.
◉ Ben obtains a mortgage for $90,000, which is the most likely
amount that he will pay for closing costs?
-$1,000
-$3,500
-$7,000
-$10,000. Answer: $3,500
◉ Front-End Ratio. Answer: A rate that calculates a borrower's
housing-related obligations as a percentage of gross monthly
,income. Frequently used by lenders to qualify borrowers for a
mortgage. Also called a housing ratio.
◉ Conventional Loan. Answer: A mortgage loan backed by private
lenders. Though not insured by any government program, such as
the FHA or VA, loans with a down payment less than 20% of the
purchase price may require private mortgage insurance.
◉ Conventional loan ratios. Answer: 28/36%
◉ FHA Mortgage ratios. Answer: 31/43%
◉ Renters ratios. Answer: 30/36%
◉ PITIA. Answer: Principal, interest, taxes, Insurance, association
dues
◉ Principal. Answer: The amount of money borrowed to buy a house
or the amount of the loan that has not been paid back to the lender.
◉ Interest. Answer: Interest is the interest rate the bank charges you
for borrowing their money.
, ◉ Taxes. Answer: Property taxes charged by the county in which
your home is located. Proceeds pay for education, law enforcement,
and other services. These are mandatory and typically costs 1% of
the value annually
◉ Mortgage insurance premium (MIP). Answer: a monthly payment
-usually part of the mortgage payment - paid by a borrower for
mortgage insurance.
◉ Private Mortgage insurance (PMI). Answer: insurance policy that
protects the mortgage lender from loss in the event the borrower
defaults on the loan; typically required by lenders when the down
payment is less than 20%
◉ Association Dues. Answer: Charged by community or
Homeowners Association to pay for repairs, upkeep, landscaping,
improvements, and property management
◉ Ground Rent. Answer: An arrangement in which the owner of a
dwelling or structure does not own the land on which the structure
resides. In such cases, the borrower takes out a mortgage to
purchase the dwelling, but must still pay rent for the land.
◉ Hourly gross monthly income calculation. Answer: total hourly
pay before deductions x hours per week x 52 weeks per year / 12
