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HUD HOUSING COUNSELOR CERTIFICATION
FINAL EXAM|2025-2026| 150 QUESTIONS&ANSWERS.
LATEST UPDATE 2025 SPRING|GRADED A+
Who is responsible for educating home-buyers about theirrights? - ANSWER: - Housing Counselor In order to minimize the impact on the client's credit score, whatis the maximum time frame within which the client should apply for pre- approval from multiple lenders? - ANSWER: - A 30 - day period What are the responsibilities of a home inspector? - ANSWER:- Examine mechanical systems, Evaluate the condition of a home, Identify items to be repaired or replaced Which is the best reason that a housing counselor would suggest that a client speak to three to five different lenders? - ANSWER:-To compare loan estimates Which is the best advice that a housing counselor can give the client to protect against identity theft? - ANSWER: - Review credit report at least once per year The client tells the lender that he is expecting a raise soon. Should the
Lender provide a Loan Estimate (LE) with, or withoutfactoring the raise?
- ANSWER:-Provide a loan estimate without factoring in the raise If this client obtains a mortgage of $100,000, typically, how muchshould he expect to pay for closing costs? - ANSWER: - $3000 to $ Is Application Fee an upfront cost of clients who are consideringrenting or buying a property? - ANSWER: - Renting A client wants to customize his home with do-it-yourself projects,this is an indication the client is best aligned with which housing option; Home- ownership or Renting? - ANSWER: - Home-ownership The client's gross monthly income is $4167 and the monthly debtsare $435. What is the maximum mortgage payment (rounded to the nearest dollar) for which this client would qualify using a standardconventional loan?
- ANSWER:- $1, NOTE: The maximum front-end ratio for a standard conventional loan is 28%, and the back-end ratio is 36%. The front-end ratio is calculated as 28% of the client's monthly income of $4,167, whichis $1,167. The back-
(MIP) based? - ANSWER: - Current principal balance NOTE: The annual mortgage insurance premium (MIP) is based onthe unpaid principal balance of the loan. The loan-to-value ratio isused to determine when private mortgage insurance (PMI) can bedropped from the loan. Credit scores do not affect MIP but might affect PMI. Which is the maximum recommended housing ratio for renting an apartment? - ANSWER: - 30% Eligibility requirements for down-payment assistance programs include which factors? - ANSWER: - Income, home-buyer education,purchase price The client is considering an FHA mortgage. What is the upfrontmortgage insurance premium (UFMIP) for an FHA mortgage? - ANSWER:- 1.75% If the client was denied a mortgage loan and the lender told him to come back after his divorce had been final for three years, what is the best advice for the housing counselor to provide to the client to report a violation to ECOA? - ANSWER: - Contact the Federal Trade
Commission as the lender's action might violate the Equal Credit Opportunity Act A question from a lender on the client's Medical History would be inappropriate or appropriate? - ANSWER: - Inappropriate Which is the upfront mortgage insurance premium (UFMIP) if the client purchases a home with an FHA loan amount of $116,000? - ANSWER:- $2, The client only tracks bill payments. Which should the housingcounselor recommend to help the client begin planning for a home purchase? A- Continue to track bill payments onlyB- Track income only C- Track all income and expenses D- Track savings deposits and expenses - ANSWER:-C- Track all income and expenses How should a client apply for the Housing Choice Voucher Program? - ANSWER:-Contact the local Public Housing
A client has been a paralegal for five years and earns $56,400 peryear. She has been working part-time at an ice cream parlor for the past few summers to save for her first home. Now that she has saved $12, toward a down payment, she no longer needs to work a second job. In the next three months, the client would like to buy a single-family home near a good school for less than $150,000. Does this client meet a lender's expectation for continued employment? - ANSWER:-Yes, because the client has been ather job over two years In reviewing a loan estimate, the housing counselor finds fees forservices that seem unnecessary. What is the most likely explanation for these fees? Choose one: A- Predatory lending practicesB- Subprime mortgage terms C- Regional lending considerations D- Variation in lending practices - ANSWER:-A- Predatory lending practices
The client thinks her cost of living is going to be the same because her mortgage payment and her rental payment arecomparable. What are three recurring costs associated with home-ownership that are not part of home rental? A- Homeowners insurance, property taxes, home repairsB- Property taxes, renters insurance, utility bill C- Utility bill, car insurance, renters insurance D- Car insurance, property taxes, cable bill - ANSWER:-Homeowners insurance, property taxes, home repairs Which additional information should the housing counselor request from the client to determine her readiness to purchase ahome? Choose One: A- Planned family sizeB- Current lease C- Pre-qualification letter D- Expenses - ANSWER:-D- Expenses A client has been a paralegal for five years and earns $56,400 peryear. She has been working part-time at an ice cream parlor for the past few
The client would like to purchase a single-family home. Prices in the area where she would like to live are around $450,000. She has $45,000 left from the life insurance settlement and she has saved an additional $5,000. She typically saves $500 per month, but when she has unexpected expenses she is unable to save. Because she takes her children to school, she usually stops on her way to work forbreakfast. A- Earned Income Tax Credit B- Child and Dependent Care Tax CreditC- Energy tax credit D- Educational tax credit - ANSWER:-B- Child and Dependent CareTax Credit The client currently keeps the $45,000 remaining from the lifeinsurance settlement in a regular checking account. Her goal is to use this money towards her down payment. Which action should the housing counselor suggest tothis client? A- Move the funds into a mutual fund B- Move funds to a large purchase savings account withlimited
accessibility C- Leave the money in her current checking account for easyaccess D- Move funds into a long-term Certificate of Deposit - ANSWER:-Move funds to a large purchase savings account with limited accessibility The client wants to move her family to a lower-priced rental unit to save money for a home, but is struggling with the upfront feesrequired to move to a new apartment complex. Which strategy would be most effective to help the client secure affordable housing and cover moving expenses quickly? A- Submit application for a housing voucherB- Find an individual landlord and negotiate C- Save for the move instead of paying utilities D- Apply for a loan to cover expenses - ANSWER:-Find an individual landlord and negotiate Which type of lease and tenancy best protects the tenant?A- An oral lease with tenancy at will B- A written lease with contractual tenancy C- A written lease with tenancy at will D- An oral lease with tenancy at sufferance - ANSWER:-A writtenlease with contractual tenancy
prepare the action plan for this client? A- Documentation of life insurance payoutB- Client's current lease agreement C- Documentation of household expenses D- Listings for properties the client is interested in purchasing - ANSWER:- Documentation of household expenses Which is the best recommendation the housing counselor shouldgive this client to help improve her credit score? A- Set up automatic credit card and loan payments to ensure ontime payment B- Apply for a loan to consolidate the credit card and auto loanbalances C- Apply for a credit card with a lower interest rate and transferthe balance of the current card D- Pay more than the minimum payment each month to reduce the credit card balance - ANSWER:-D- Pay more than the minimumpayment each month to reduce the credit card balance Which factor would most likely impact the client's housingaffordability in the future?
A- A reduction in income when the survivor benefit runs out when children turn 18 B- The need for a second car when the children start to drive C- Selecting a 30 - year fixed rate mortgage versus a 15 - year fixedrate mortgage D- The cost of home repairs and maintenance - ANSWER:-A- A reduction in income when the survivor benefit runs out when children turn 18 The client currently pays $2,050 in rent, though her mortgage payment could be higher. Which is the most effective strategy to be able to manage a higher payment? A- Withdraw retirement account funds to pay down car and creditcard balances B- Delay home purchase until the car loan is paid offC- Consolidate car loan and credit card balances D- Utilize savings to pay the mortgage in the future - ANSWER:-B- Delay home purchase until the car loan is paid off Which was instituted by Congress to better protect home-buyers
critical housing topics C- Accompany clients when viewing properties to ensure they are treated fairly D- Discourage tenants from seeking housing with landlords who appear to consistently engage in discriminatory practices - ANSWER:- B- Create an outreach campaign designed to raise awareness about critical housing topics Which section of a credit report shows a client's payment history? - ANSWER:-Account information Which is the maximum payment (rounded to the nearest dollar)for principal, interest, taxes, insurance, and association fees (PITIA) this client can afford according to FHA back-end ratio guidelines? Assets, $58200, Total Gross Monthly Income $6400 Debt Expenses $615, Household Expenses $4679 - ANSWER:-$ NOTE: The back-end ratio includes total principal, interest, taxes, and insurance, plus other monthly debt. The maximum back-end ratio for FHA is 43%. The client's total monthly income is $6,400, and her total monthly debt is $615. Forty-three percent of $6,400is $2,752. Subtracting the total monthly debt from $2,752, the remainder is $2,137,
which is the maximum total principal, interest, taxes, insurance, and association fees (PITIA) payment. Reference: Module 2.1 Renting vs.Buying Page Number 21 to 24 Which is the down payment required if the client purchases a $375,000 home with an FHA mortgage? - ANSWER:-$ , NOTE: The down payment would be 3.5% of the $375,000 purchase price, which is $13,125 ($375,000 multiplied by 0.035equals $13,125). The client attempted to purchase a condo six months ago but wasdenied. The mortgage required a minimum credit score of 640, 3% down payment and a 35% front-end ratio and a 43% back-endratio. The purchase price was $225,000 with a down payment of $45,000, monthly principal and interest payment of $939, property taxes of $196 and a homeowner association fee of $228 for a total monthly payment of $1,363. During the intake process,she was asked about her children and her responsibilities as a mother. Which government rule or regulation may have been violated when the loan officer denied the loan for the condo? - ANSWER:-Fair Housing Act
The client's child and a friend are severely injured in the client'shome. Which claim is most likely covered under her homeowners' insurance? A- A claim to repair damage to the home
B- A claim for medical payments of the client's child onlyC- A claim for medical payments of the friend only D- A claim for medical payments for both children - ANSWER:-C-A claim for medical payments of the friend only The client finally leaves her home and moves to a rental and isconcerned about being displaced if the apartment becomes unlivable. Which is the best advice the counselor can provide? A- Have a designated emergency credit card B- Purchase a renters insurance policy that only covers contents and personal liability C- Plan to apply rent payments to hotel expenses D- Purchase a renters insurance policy that includes loss-of-use coverage - ANSWER:-D- Purchase a renters insurance policy that includes loss-of-use coverage Which is the best advice a housing counselor can give this client who is concerned about high heating bills and wants information on how to plan for home maintenance? A- Create a list of each key system in her home with target datesfor
