HUD Practice Exam Questions and Answers 2023
Correctly answered
Which document is most important when working with a client to develop an initial
budget as part of a Client Action Plan?
List of Assets
Retirement plan statement
Pay stub X
Current lease
A client would like 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?
...
A credit report may contain which information?
Income history
Criminal record
# of accounts in collection status
A history of payments on an elctric bill
A credit report contains inaccurate information. Which action item should the counselor
include in the Client Action Plan?
FIle a dispute with the appropaite credit reporting agency
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?
...
Which action would a client take to improve a credit score?
...
A client does not receive a written monthly statement from the credit card company.
Which credit law could this omission violate?
FCBA
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%.
The client asks the housing counselor if the offer is a case of illegal predatory lending.
How should the housing counselor respond?
I am unable to determine whether the loan is predatory but i suggest you shop around
with other ledning sources
, Which action should a counselor recommend a client take first after discovering identity
theft?
File an identity theft report
In which situation would a client's responsibilities, recurring costs, and upfront costs be
evaluated?
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?
Front End Ratio Formula
Conventional = <28%
Which type of government insured loan was created for financing homes in rural areas?
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?
Emergency Fund
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?
Front End Ratio Formula
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)?
Debt to income ratio or back end ratio
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?
FHA downpayment is at least 3.5%
Under which condition would most down payment assistance programs approve a
waiver of the homeownership education requirement?
Most will not waive the homeownership education requirement
Which type of assistance administered by a public housing authority allows for location
flexibility?
Project based vouchers 2.2-23
A client's payment history affects which factor of creditworthiness?
Character
Which action may a lender take to determine a borrower's character?
Call an employer to verify employment
A client is in the process of purchasing a home with a sales price of $162,000. The
client has a net worth of $50,000, a credit score of 680, and a debt-to-income ratio of
Correctly answered
Which document is most important when working with a client to develop an initial
budget as part of a Client Action Plan?
List of Assets
Retirement plan statement
Pay stub X
Current lease
A client would like 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?
...
A credit report may contain which information?
Income history
Criminal record
# of accounts in collection status
A history of payments on an elctric bill
A credit report contains inaccurate information. Which action item should the counselor
include in the Client Action Plan?
FIle a dispute with the appropaite credit reporting agency
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?
...
Which action would a client take to improve a credit score?
...
A client does not receive a written monthly statement from the credit card company.
Which credit law could this omission violate?
FCBA
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%.
The client asks the housing counselor if the offer is a case of illegal predatory lending.
How should the housing counselor respond?
I am unable to determine whether the loan is predatory but i suggest you shop around
with other ledning sources
, Which action should a counselor recommend a client take first after discovering identity
theft?
File an identity theft report
In which situation would a client's responsibilities, recurring costs, and upfront costs be
evaluated?
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?
Front End Ratio Formula
Conventional = <28%
Which type of government insured loan was created for financing homes in rural areas?
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?
Emergency Fund
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?
Front End Ratio Formula
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)?
Debt to income ratio or back end ratio
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?
FHA downpayment is at least 3.5%
Under which condition would most down payment assistance programs approve a
waiver of the homeownership education requirement?
Most will not waive the homeownership education requirement
Which type of assistance administered by a public housing authority allows for location
flexibility?
Project based vouchers 2.2-23
A client's payment history affects which factor of creditworthiness?
Character
Which action may a lender take to determine a borrower's character?
Call an employer to verify employment
A client is in the process of purchasing a home with a sales price of $162,000. The
client has a net worth of $50,000, a credit score of 680, and a debt-to-income ratio of
