Loan Processing Fundamentals Flashcards

A borrower has $2,100 in total monthly debts including the new housing payment and $6,000 in gross monthly income. What is the back-end DTI?

Answer: 35%

Back-end DTI equals $2,100 divided by $6,000, or 35%.

A borrower's proposed PITI is $1,500 and gross monthly income is $5,000. What is the housing (front-end) ratio?

Answer: 30%

The front-end ratio is $1,500 divided by $5,000, which equals 30%.

A borrower earns $25 per hour working a consistent 40 hours per week. What is the monthly qualifying income?

Answer: $4,333.33

$25 x 40 hours x 52 weeks / 12 months equals $4,333.33.

Under standard agency guidelines, how much self-employment history is generally needed to use self-employed income?

Answer: 2 years

A two-year self-employment history is generally required, though 12-24 months may be allowed with strong mitigating factors.

Purchase price is $310,000, the appraised value is $300,000, and the loan amount is $270,000. What is the LTV?

Answer: 90.0%

LTV uses the lesser of price or appraised value, so $270,000 / $300,000 equals 90%.

Under Fannie Mae guidelines, if a deferred student loan shows no monthly payment on the credit report, what payment may be used for qualifying?

Answer: 1% of the outstanding balance

Fannie Mae allows 1% of the outstanding balance or a calculated fully amortizing payment when none is reported.

When using a current lease to calculate rental income under Fannie Mae guidelines, what percentage of gross monthly rent is typically used?

Answer: 75%

Fannie Mae applies a 25% vacancy and maintenance factor, using 75% of gross rent.