CMP - Certified Mortgage Processor Income, DTI, and LTV Calculations Questions and Answers

Question 1

A borrower has a gross monthly income of $7,000.
Their proposed monthly housing expense (PITI) is $2,100.
They also have a $450 monthly car payment and a $250 monthly student loan payment.
What is the borrower's back-end debt-to-income (DTI) ratio?

Accepted Answer

45%

Answer

30%

Answer

38%

Answer

40%

Question 2

A property is under contract for $400,000. The borrower is making a down payment of $60,000. The property appraises for $390,000. What is the Loan-to-Value (LTV) ratio?

Accepted Answer

84.6%

Answer

85.0%

Answer

87.2%

Answer

85.7%

Question 3

Which of the following is the most accurate definition of the front-end DTI ratio?

Accepted Answer

The ratio of the borrower's proposed monthly housing expense (PITI) to their gross monthly income.

Answer

The ratio of the borrower's total monthly debt payments to their gross monthly income.

Answer

The ratio of the borrower's proposed monthly housing expense (PITI) to their net monthly income.

Answer

The ratio of the borrower's total assets to their total liabilities.

Question 4

A self-employed borrower shows a net profit of $85,000 on their most recent year's tax return and a net profit of $75,000 on the prior year's tax return. To calculate a stable monthly qualifying income, what would a mortgage processor typically use?

Accepted Answer

A 24-month average of the two years: $6,667

Answer

The most recent year's monthly income: $7,083

Answer

The prior year's monthly income: $6,250

Answer

The lower of the two years' monthly income: $6,250

Question 5

A borrower is purchasing a home for $500,000 and has a first mortgage of $400,000. They are also obtaining a second mortgage (piggyback loan) for $50,000 to cover part of their down payment. What is the Combined Loan-to-Value (CLTV) ratio?

Accepted Answer

90%

Answer

80%

Answer

10%

Answer

100%

Question 6

When calculating a borrower's total monthly debt for the DTI ratio, which of the following is generally EXCLUDED?

Accepted Answer

Monthly utilities and grocery expenses

Answer

Monthly car loan payment

Answer

Minimum monthly credit card payment

Answer

Monthly student loan payment

A borrower has a gross monthly income of $7,000.Their proposed monthly housing expense (PITI) is $2,100.They also have a $450 monthly car payment and a $250 monthly student loan payment.What is the borrower's back-end debt-to-income (DTI) ratio?

A borrower has a gross monthly income of $7,000.
Their proposed monthly housing expense (PITI) is $2,100.
They also have a $450 monthly car payment and a $250 monthly student loan payment.
What is the borrower's back-end debt-to-income (DTI) ratio?