HUD PRACTICE TEST | QUESTIONS AND ANSWERS | 2026 UPDATE | WITH COMPLETE
SOLUTION
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.
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."
, HUD PRACTICE TEST | QUESTIONS AND ANSWERS | 2026 UPDATE | WITH COMPLETE
SOLUTION
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
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
and is using an FHA Energy Efficient Mortgage (EEM). If the client wants to make the minimum down
payment for a home priced at $150,000, how much more does the client need to save? -
(ANSWER)$1,750
SOLUTION
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.
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."
, HUD PRACTICE TEST | QUESTIONS AND ANSWERS | 2026 UPDATE | WITH COMPLETE
SOLUTION
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
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
and is using an FHA Energy Efficient Mortgage (EEM). If the client wants to make the minimum down
payment for a home priced at $150,000, how much more does the client need to save? -
(ANSWER)$1,750
