FREDDIE MAC - CREDIT SMART EXAM
2025/2026 QUESTIONS AND ANSWERS
100% PASS
The percentage of your gross monthly income that goes toward paying for your housing
expenses is called the "housing expense ratio" and is based on the total housing payment,
which includes: - ANS Principal, interest, property taxes, homeowner's insurance, mortgage
insurance, homeowner's or condo association fees
Lenders don't include your future housing payment in your debt-to-income ratio, only all other
outstanding debts. - ANS False
The principal amount is the total amount borrowed. - ANS True
Do lenders use gross income or net profits when calculating mortgage affordability for self-
employed borrowers? - ANS Net profits
An escrow account is a special account managed by the borrower that holds funds for property
taxes and property insurance payments. - ANS False
1 @COPYRIGHT 2025/2026.
, Having adequate cash reserves demonstrates to your lender that you have responsibly
managed your money and have savings and other assets to fall back on in case of emergency. -
ANS True
Capital - or cash to close - refers to the funds you need to save in order to cover the cost of
down payment and closing costs. - ANS True
Acceptable sources of capital include: - ANS Funds from a family member, funds from a
down payment assistance program or funds from your savings account
Lenders consider investments to be (select all that apply): - ANS Lenders consider
investments to be IRAs, bonds, CDs, stocks and 401(k) plans.
To determine if you have adequate savings to obtain a mortgage and sustain homeownership,
lenders will average the last six months of your checking and savings account balances. -
ANS False
Lenders consider four primary factors when determining whether to approve a loan - the 4 C's
of lending. What are they? - ANS Credit, Capacity, Capital and Collateral
Derogatory information on your credit report may include: collections, judgements,
bankruptcies and/or late payments. - ANS True
Lenders generally don't have any guidelines or restrictions when it comes to the home you
want to purchase or its condition, provided you have good credit. - ANS False
The home inspection is ordered through the lender and determines the market value of the
home. - ANS False
2 @COPYRIGHT 2025/2026.
2025/2026 QUESTIONS AND ANSWERS
100% PASS
The percentage of your gross monthly income that goes toward paying for your housing
expenses is called the "housing expense ratio" and is based on the total housing payment,
which includes: - ANS Principal, interest, property taxes, homeowner's insurance, mortgage
insurance, homeowner's or condo association fees
Lenders don't include your future housing payment in your debt-to-income ratio, only all other
outstanding debts. - ANS False
The principal amount is the total amount borrowed. - ANS True
Do lenders use gross income or net profits when calculating mortgage affordability for self-
employed borrowers? - ANS Net profits
An escrow account is a special account managed by the borrower that holds funds for property
taxes and property insurance payments. - ANS False
1 @COPYRIGHT 2025/2026.
, Having adequate cash reserves demonstrates to your lender that you have responsibly
managed your money and have savings and other assets to fall back on in case of emergency. -
ANS True
Capital - or cash to close - refers to the funds you need to save in order to cover the cost of
down payment and closing costs. - ANS True
Acceptable sources of capital include: - ANS Funds from a family member, funds from a
down payment assistance program or funds from your savings account
Lenders consider investments to be (select all that apply): - ANS Lenders consider
investments to be IRAs, bonds, CDs, stocks and 401(k) plans.
To determine if you have adequate savings to obtain a mortgage and sustain homeownership,
lenders will average the last six months of your checking and savings account balances. -
ANS False
Lenders consider four primary factors when determining whether to approve a loan - the 4 C's
of lending. What are they? - ANS Credit, Capacity, Capital and Collateral
Derogatory information on your credit report may include: collections, judgements,
bankruptcies and/or late payments. - ANS True
Lenders generally don't have any guidelines or restrictions when it comes to the home you
want to purchase or its condition, provided you have good credit. - ANS False
The home inspection is ordered through the lender and determines the market value of the
home. - ANS False
2 @COPYRIGHT 2025/2026.
