HUD PRACTICE TEST EXAM 2025/2026 QUESTIONS WITH COMPLETE SOLUTIONS

1) A client would like to purchase a house 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? - ANSWERFind a second job 8. A client who is not behind on the mortgage was recently informed of a reduction of income for two months by the client's employer. The Client has an FHA loan and would like to take action as soon as possible to avoid a mortgage delinquency. Which FHA Loss Mitigation option is likely best for this client? - ANSWERInformal/formal forbearance 5. Which does a servicer do in the non-judicial foreclosure? - ANSWERIssues a Notice of Default (NOD) to the borrower 6 Under which circumstance must a servicer refrain from the foreclosure process - ANSWERThe client has a pending loan modification application 7. What should a counselor and borrower focus on when developing an emergency budget? - ANSWERIncreasing income and decreasing expenses 2) 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? - ANSWERIt decreases credit utilization, causing a positive impact on the credit score 3. Which family is most likely to qualify for the Earned Income Tax Credit (EITC) - ANSWERAn individual employed part time in a minimum wage job 4. A client shopping for a mortgage loan present 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