HUD HOUSING COUNSELOR CERTIFICATION EXAM 2026/2027 | 100% VERIFIED
QUESTIONS AND CORRECT ANSWERS | LATEST UPDATED
1. What is the primary purpose of the HUD Housing Counselling Program?
A. To provide free housing to low-income families
B. To assist individuals and families in improving their housing situation and
making sound housing decisions ✓ CORRECT
C. To regulate mortgage lenders across the United States
D. To manage public housing developments nationwide
Explanation: The HUD Housing Counseling Program assists individuals and
families in improving their housing situation and making sound housing decisions
through education and counseling services.
2. Which federal agency oversees the HUD Housing Counseling program?
A. The Federal Reserve
B. The Consumer Financial Protection Bureau (CFPB)
C. The U.S. Department of Housing and Urban Development (HUD) ✓
CORRECT
D. The Federal Housing Finance Agency (FHFA)
Explanation: The U.S. Department of Housing and Urban Development (HUD)
oversees the Housing Counseling program under 24 CFR Part 214.
3. A client's gross monthly income is $4,500 and their total monthly debt payments
are $1,800. What is their debt-to-income (DTI) ratio?
A. 25%
B. 30%
C. 40% ✓ CORRECT
D. 45%
Explanation: DTI = Total monthly debt / Gross monthly income = $1,800 / $4,500
= 0.40 = 40%.
,4. What is the maximum front-end debt-to-income ratio typically allowed for FHA
loans?
A. 28%
B. 31% ✓ CORRECT
C. 36%
D. 43%
Explanation: FHA guidelines generally allow a front-end (housing) DTI ratio of up
to 31% of the borrower's gross monthly income.
5. Which of the following best describes a budget deficit?
A. When monthly income exceeds monthly expenses
B. When monthly expenses exceed monthly income ✓ CORRECT
C. When savings equal monthly expenses
D. When debt payments equal monthly income
Explanation: A budget deficit occurs when a client's monthly expenses exceed their
monthly income, meaning they are spending more than they earn.
6. What does PITI stand for in mortgage terminology?
A. Principal, Interest, Taxes, Insurance ✓ CORRECT
B. Payment, Income, Term, Interest
C. Principal, Income, Transfer, Insurance
D. Property, Investment, Taxes, Installment
Explanation: PITI stands for Principal, Interest, Taxes, and Insurance — the four
components that make up a typical monthly mortgage payment.
7. A client has a credit score of 580. Which loan program would most likely
accommodate this score for a home purchase?
A. Conventional loan with 5% down
B. VA loan
C. FHA loan with 10% down ✓ CORRECT
D. USDA loan
Explanation: FHA allows borrowers with credit scores as low as 500 with 10%
down payment. A score of 580 qualifies for FHA with 3.5% down, though 10% is
still an option.
8. Which of the following is considered a fixed expense in a household budget?
, A. Groceries
B. Utility bills
C. Monthly rent payment ✓ CORRECT
D. Entertainment costs
Explanation: Fixed expenses remain the same each month. Monthly rent is a fixed
expense because it does not vary. Groceries, utilities, and entertainment are
variable expenses.
9. What is the recommended emergency fund amount according to sound financial
planning principles?
A. One month of expenses
B. Two months of income
C. Three to six months of living expenses ✓ CORRECT
D. One year of gross income
Explanation: Sound financial planning recommends maintaining three to six
months of living expenses in an accessible emergency fund.
10. Which section of the federal Fair Housing Act prohibits discrimination based on
familial status?
A. Section 3
B. Section 6
C. Section 8
D. Section 804 ✓ CORRECT
Explanation: Section 804 of the Fair Housing Act (42 U.S.C. § 3604) prohibits
discrimination in the sale or rental of housing, including discrimination based on
familial status.
11. What does APR stand for and what does it measure?
A. Annual Payment Rate — measures total payments per year
B. Annual Percentage Rate — measures the true cost of borrowing including
fees ✓ CORRECT
C. Adjusted Principal Rate — measures interest changes over time
D. Average Principal Reduction — measures equity growth annually
Explanation: APR stands for Annual Percentage Rate. It measures the true annual
cost of a loan, including interest and fees, expressed as a percentage.
, 12. Under the Equal Credit Opportunity Act (ECOA), a lender must notify an
applicant of a credit decision within how many days?
A. 15 days
B. 30 days ✓ CORRECT
C. 45 days
D. 60 days
Explanation: Under ECOA (Regulation B), creditors must notify applicants of the
credit decision within 30 days of receiving a completed application.
13. Which of the following is NOT a protected class under the federal Fair Housing
Act?
A. Religion
B. National origin
C. Income level ✓ CORRECT
D. Familial status
Explanation: The federal Fair Housing Act protects race, color, national origin,
religion, sex, disability, and familial status. Income level is not a federally
protected class under the FHA.
14. A client wants to save $12,000 in 24 months. How much must they save per
month?
A. $400
B. $500 ✓ CORRECT
C. $600
D. $1,000
Explanation: $12,000 divided by 24 months = $500 per month.
15. What is the primary purpose of a Loan Estimate (LE) form?
A. To confirm a mortgage has been approved
B. To provide borrowers with key loan terms and projected closing costs ✓
CORRECT
C. To document the appraisal value of the property
D. To authorize the lender to pull a credit report
Explanation: The Loan Estimate provides borrowers with key loan terms,
projected payments, and estimated closing costs within three business days of
receiving a mortgage application.
QUESTIONS AND CORRECT ANSWERS | LATEST UPDATED
1. What is the primary purpose of the HUD Housing Counselling Program?
A. To provide free housing to low-income families
B. To assist individuals and families in improving their housing situation and
making sound housing decisions ✓ CORRECT
C. To regulate mortgage lenders across the United States
D. To manage public housing developments nationwide
Explanation: The HUD Housing Counseling Program assists individuals and
families in improving their housing situation and making sound housing decisions
through education and counseling services.
2. Which federal agency oversees the HUD Housing Counseling program?
A. The Federal Reserve
B. The Consumer Financial Protection Bureau (CFPB)
C. The U.S. Department of Housing and Urban Development (HUD) ✓
CORRECT
D. The Federal Housing Finance Agency (FHFA)
Explanation: The U.S. Department of Housing and Urban Development (HUD)
oversees the Housing Counseling program under 24 CFR Part 214.
3. A client's gross monthly income is $4,500 and their total monthly debt payments
are $1,800. What is their debt-to-income (DTI) ratio?
A. 25%
B. 30%
C. 40% ✓ CORRECT
D. 45%
Explanation: DTI = Total monthly debt / Gross monthly income = $1,800 / $4,500
= 0.40 = 40%.
,4. What is the maximum front-end debt-to-income ratio typically allowed for FHA
loans?
A. 28%
B. 31% ✓ CORRECT
C. 36%
D. 43%
Explanation: FHA guidelines generally allow a front-end (housing) DTI ratio of up
to 31% of the borrower's gross monthly income.
5. Which of the following best describes a budget deficit?
A. When monthly income exceeds monthly expenses
B. When monthly expenses exceed monthly income ✓ CORRECT
C. When savings equal monthly expenses
D. When debt payments equal monthly income
Explanation: A budget deficit occurs when a client's monthly expenses exceed their
monthly income, meaning they are spending more than they earn.
6. What does PITI stand for in mortgage terminology?
A. Principal, Interest, Taxes, Insurance ✓ CORRECT
B. Payment, Income, Term, Interest
C. Principal, Income, Transfer, Insurance
D. Property, Investment, Taxes, Installment
Explanation: PITI stands for Principal, Interest, Taxes, and Insurance — the four
components that make up a typical monthly mortgage payment.
7. A client has a credit score of 580. Which loan program would most likely
accommodate this score for a home purchase?
A. Conventional loan with 5% down
B. VA loan
C. FHA loan with 10% down ✓ CORRECT
D. USDA loan
Explanation: FHA allows borrowers with credit scores as low as 500 with 10%
down payment. A score of 580 qualifies for FHA with 3.5% down, though 10% is
still an option.
8. Which of the following is considered a fixed expense in a household budget?
, A. Groceries
B. Utility bills
C. Monthly rent payment ✓ CORRECT
D. Entertainment costs
Explanation: Fixed expenses remain the same each month. Monthly rent is a fixed
expense because it does not vary. Groceries, utilities, and entertainment are
variable expenses.
9. What is the recommended emergency fund amount according to sound financial
planning principles?
A. One month of expenses
B. Two months of income
C. Three to six months of living expenses ✓ CORRECT
D. One year of gross income
Explanation: Sound financial planning recommends maintaining three to six
months of living expenses in an accessible emergency fund.
10. Which section of the federal Fair Housing Act prohibits discrimination based on
familial status?
A. Section 3
B. Section 6
C. Section 8
D. Section 804 ✓ CORRECT
Explanation: Section 804 of the Fair Housing Act (42 U.S.C. § 3604) prohibits
discrimination in the sale or rental of housing, including discrimination based on
familial status.
11. What does APR stand for and what does it measure?
A. Annual Payment Rate — measures total payments per year
B. Annual Percentage Rate — measures the true cost of borrowing including
fees ✓ CORRECT
C. Adjusted Principal Rate — measures interest changes over time
D. Average Principal Reduction — measures equity growth annually
Explanation: APR stands for Annual Percentage Rate. It measures the true annual
cost of a loan, including interest and fees, expressed as a percentage.
, 12. Under the Equal Credit Opportunity Act (ECOA), a lender must notify an
applicant of a credit decision within how many days?
A. 15 days
B. 30 days ✓ CORRECT
C. 45 days
D. 60 days
Explanation: Under ECOA (Regulation B), creditors must notify applicants of the
credit decision within 30 days of receiving a completed application.
13. Which of the following is NOT a protected class under the federal Fair Housing
Act?
A. Religion
B. National origin
C. Income level ✓ CORRECT
D. Familial status
Explanation: The federal Fair Housing Act protects race, color, national origin,
religion, sex, disability, and familial status. Income level is not a federally
protected class under the FHA.
14. A client wants to save $12,000 in 24 months. How much must they save per
month?
A. $400
B. $500 ✓ CORRECT
C. $600
D. $1,000
Explanation: $12,000 divided by 24 months = $500 per month.
15. What is the primary purpose of a Loan Estimate (LE) form?
A. To confirm a mortgage has been approved
B. To provide borrowers with key loan terms and projected closing costs ✓
CORRECT
C. To document the appraisal value of the property
D. To authorize the lender to pull a credit report
Explanation: The Loan Estimate provides borrowers with key loan terms,
projected payments, and estimated closing costs within three business days of
receiving a mortgage application.
