Page 1 of 20
HUD CERTIFICATION EXAM | FREQUENTLY
TESTED QUESTIONS WITH CORRECT
ANSWERS | BRAND NEW!
Association Dues - ✔✔✔ Correct Answer > Charged by community or
Homeowners Association to pay for repairs, upkeep, landscaping,
improvements and property management.
Adjusted Gross Income - ✔✔✔ Correct Answer > Gross income minus
adjustments, or reductions, that one is eligible for, such as
deductions for unreimbursed business expenses, tuition and
fees, and contributions to certain retirement accounts.
Profit and Loss Statments - ✔✔✔ Correct Answer > A summary of
revenue, costs, and expenses incurred during a defined period,
such as a fiscal year.
Back-End Ratio - ✔✔✔ Correct Answer > A rate that calculates a
borrower's total monthly debt, including housing and other debt
obligations, as a percentage of gross monthly income.
,Page 2 of 20
Character - ✔✔✔ Correct Answer > Credit history, employment history,
and housing stability to determine the likeliness that the
borrower will repay their debts
Capacity - ✔✔✔ Correct Answer > Lender considers consistency of
employment and income, adequacy of income to repay debt,
recurring debts and frequency and type of wages
Capital - ✔✔✔ Correct Answer > Lenders inquire about how much
money a borrower has saved to pay a deposit or down payment
for the home intended to purchase.
Collateral - ✔✔✔ Correct Answer > Lenders often request a borrower
to pledge specific property or assets as collateral to secure
repayment of loan.
Front-end ratio for obtaining a conventional loan - ✔✔✔ Correct
Answer > 28%
Front-end ratio for obtaining an FHA loan - ✔✔✔ Correct Answer > 31%
Affordable front-end ratio for renters - ✔✔✔ Correct Answer > 30%
, Page 3 of 20
Per FHA, you are considered self-employed if you have ___% or
greater ownership interest in a business. - ✔✔✔ Correct Answer > 25%
Subprime Mortgage Loans - ✔✔✔ Correct Answer > A type of
mortgage with less stringent lending and underwriting terms and
conditions, usually offered to borrowers with blemished or
limited credit histories.
Type of mortgage that is a good fit for those that have limited
funds for a down payment and closing costs - ✔✔✔ Correct Answer >
FHA Mortgage
Type of loan that may be a good fit for those that have a poor
credit history and/or are ineligible for other loans - ✔✔✔ Correct
Answer > Subprime Mortgage Loan
Type of mortgage may be a good fit for eligible veterans, suitable
credit and sufficient income and have a certificate of eligibility. -
✔✔✔ Correct Answer > VA Loan
Type of mortgage may be a good fit for those who want to live in
eligible rural areas, make less than 115% AMI, need flexible credit
guidelines, may not have funds for a DP - ✔✔✔ Correct Answer > USDA
Loan
HUD CERTIFICATION EXAM | FREQUENTLY
TESTED QUESTIONS WITH CORRECT
ANSWERS | BRAND NEW!
Association Dues - ✔✔✔ Correct Answer > Charged by community or
Homeowners Association to pay for repairs, upkeep, landscaping,
improvements and property management.
Adjusted Gross Income - ✔✔✔ Correct Answer > Gross income minus
adjustments, or reductions, that one is eligible for, such as
deductions for unreimbursed business expenses, tuition and
fees, and contributions to certain retirement accounts.
Profit and Loss Statments - ✔✔✔ Correct Answer > A summary of
revenue, costs, and expenses incurred during a defined period,
such as a fiscal year.
Back-End Ratio - ✔✔✔ Correct Answer > A rate that calculates a
borrower's total monthly debt, including housing and other debt
obligations, as a percentage of gross monthly income.
,Page 2 of 20
Character - ✔✔✔ Correct Answer > Credit history, employment history,
and housing stability to determine the likeliness that the
borrower will repay their debts
Capacity - ✔✔✔ Correct Answer > Lender considers consistency of
employment and income, adequacy of income to repay debt,
recurring debts and frequency and type of wages
Capital - ✔✔✔ Correct Answer > Lenders inquire about how much
money a borrower has saved to pay a deposit or down payment
for the home intended to purchase.
Collateral - ✔✔✔ Correct Answer > Lenders often request a borrower
to pledge specific property or assets as collateral to secure
repayment of loan.
Front-end ratio for obtaining a conventional loan - ✔✔✔ Correct
Answer > 28%
Front-end ratio for obtaining an FHA loan - ✔✔✔ Correct Answer > 31%
Affordable front-end ratio for renters - ✔✔✔ Correct Answer > 30%
, Page 3 of 20
Per FHA, you are considered self-employed if you have ___% or
greater ownership interest in a business. - ✔✔✔ Correct Answer > 25%
Subprime Mortgage Loans - ✔✔✔ Correct Answer > A type of
mortgage with less stringent lending and underwriting terms and
conditions, usually offered to borrowers with blemished or
limited credit histories.
Type of mortgage that is a good fit for those that have limited
funds for a down payment and closing costs - ✔✔✔ Correct Answer >
FHA Mortgage
Type of loan that may be a good fit for those that have a poor
credit history and/or are ineligible for other loans - ✔✔✔ Correct
Answer > Subprime Mortgage Loan
Type of mortgage may be a good fit for eligible veterans, suitable
credit and sufficient income and have a certificate of eligibility. -
✔✔✔ Correct Answer > VA Loan
Type of mortgage may be a good fit for those who want to live in
eligible rural areas, make less than 115% AMI, need flexible credit
guidelines, may not have funds for a DP - ✔✔✔ Correct Answer > USDA
Loan
