Loan Officer Training General Knowledge Questions and Answers Updated 2026

Loan Officer Training
General Knowledge
Questions and Answers
Updated 2026
Loan-to-ValueBRatioB-
BAnswerAmountBofBmoneyBborrowedB(theBloanBamountBofBaBfirstBmortgage)Bcompare
dBtoBtheBvalueBofBtheBpropertyB



UsesBtheBlowerBofBtheBappraisedBvalueBorBtheBsaleBprice



LowerBLTVB=BhigherBborrowerBdownBpayment:

-80%B-BStandardBconventionalBloan;BnoBprivateBmortgageBinsuranceB(PMI)Brequired

-90%B-
BRequiresBatBleastBhalfBofBtheB0%BpaymentB(5%)BtoBbeBmadeBfromBpersonalBcashBres
ervesB

-95%B-
BRequiresBownerBoccupancyBofBtheBproperty;BdownBpaymentBfromBpersonalBcashBrese
rves,BwithoutBsecondaryB(owner)BfinancingBorBgifts

-100%B-BUsuallyBrequiresBtheBborrowerBtoBbeBanBowner-
occupantBandBtheBpropertyBtoBbeBprimaryBresidence;BjobBstabilityBandBincomeBcashBfl
owBalsoBimportant



NonconformingB-
BAnswerDoBnotBmeetBstandardsBofBFannieBMae/FreddieBMacBandBcannotBbeBsoldBtoBt
hem



SizeBofBtheBloanBexceedsBmaximumBloanBamount:

-2009BmaximumBisB$417,000BonBaBsingle-familyBhome

, -HigherBlimitsBapplyBinBsome

-AlsoBcalledBjumboBloan



CreditBqualityBofBbuyerBdoesBnotBmeetBtheBminimumBstandards:

-ClassifiedBasBaBBBorBCBborrower

-SomeoneBwithBpastBcreditBproblemBorBlowBcreditBscoresBareBlow

-CanBoftenBgetBloansBfromBlendersBsuchBasBneighborhoodBbanks



InteragencyBGuidelinesB-BAnswer2007BStatementBonBSubprimeBMortgageBLendingB



2006BGuidanceBonBNontraditionalBMortgageBProductsB



JointlyBpublishedBbyBtheBfollowingBagencies:

-BoardBofBGovernorsBofBtheBFederalBReserveBSystemB(Board)

-FederalBDepositBInsuranceBCorporationB(FDIC)

-OfficeBofBtheBComptrollerBofBtheBCurrencyB(OCC)

-OfficeBofBThriftBSupervisionB(OTS)

-NationalBCreditBUnionBAdministrationB(NCUA)



NontraditionalBMortgageBProductsB-
BAnswerMortgageBproductsBthatBallowBborrowersBtoBdeferBprincipalBand,Bsometimes,Bi
nterestB



OutlinesBprudentBunderwritingBandBconsumerBprotectionBprinciples:B

-Collateral-dependentBloans--
LoanBtermsBthatBrelyBonBpropertyBsaleBorBrefinancingBonceBamortizationBbegins

-RiskBlayering--
RiskBlayeringBfeaturesBshouldBbeBcompensatedBwithBriskBmitigatingBfeatures