Practice Test Geeks(CRU) Certified Residential Underwriter Practice Test
← All CRU Flashcard Decks

Residential Mortgage Products & Guidelines Flashcards

7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Residential Mortgage Products & Guidelines flashcards as text

  1. A borrower is purchasing a 4-unit property as their primary residence using an FHA loan. What is the minimum required down payment?

    Answer: 3.5%

    FHA requires a minimum 3.5% down payment for 1-4 unit primary residences when the borrower's credit score is 580 or higher.

  2. A construction-to-permanent loan converts to a permanent mortgage upon:

    Answer: Issuance of the Certificate of Occupancy (CO) and completion of construction

    A construction-to-permanent loan converts to the permanent mortgage phase when construction is complete and the Certificate of Occupancy has been issued.

  3. Which of the following is NOT an eligible use of USDA Section 502 Guaranteed loan proceeds?

    Answer: Purchase of an investment property to generate rental income

    USDA Section 502 Guaranteed loans are restricted to owner-occupied primary residences and cannot be used to purchase investment or rental properties.

  4. What maximum DTI ratio does Fannie Mae's Desktop Underwriter (DU) system most commonly approve for manually underwritten files without compensating factors?

    Answer: 43%

    Fannie Mae's standard manual underwriting guidelines cap DTI at 43% without compensating factors, though DU can approve higher DTIs based on risk layering.

  5. A borrower has a conforming fixed-rate loan with an LTV of 78% at origination based on the original purchase price. Under the Homeowners Protection Act (HPA), the lender must:

    Answer: Automatically cancel PMI on the date LTV is scheduled to reach 78% of the original value

    The HPA requires automatic PMI termination when the loan is scheduled to reach 78% LTV based on original value and the borrower is current on payments.

  6. A reverse mortgage (HECM) requires the borrower to meet which of the following eligibility criteria?

    Answer: Minimum age of 62 and the property must be the borrower's primary residence

    FHA HECM reverse mortgages require borrowers to be at least 62 years old and occupy the property as their primary residence; existing mortgages can be paid off with proceeds.

  7. When a conventional loan file is flagged as a 'high-cost mortgage' under HOEPA, which of the following restrictions applies?

    Answer: Balloon payments are prohibited on loans with terms of less than 5 years from origination for most circumstances

    HOEPA high-cost mortgages prohibit balloon payments on loan terms shorter than 5 years, among other restrictions designed to protect consumers from abusive lending.