Practice Test Geeks(FHA) Federal Housing Administration Appraiser Certification Practice Test
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Financial Analysis & Planning Flashcards

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

Read the first 7 Financial Analysis & Planning flashcards as text

  1. For FHA small residential income properties (2-4 units), which form is required to analyze rental income and operating expenses?

    Answer: Fannie Mae Form 1025 / Freddie Mac Form 72

    Form 1025 (Small Residential Income Property Appraisal Report) is the required form for 2-4 unit FHA income property appraisals.

  2. When market rents for an FHA subject property are declining, how should the appraiser treat the vacancy and collection loss allowance?

    Answer: Increase the vacancy allowance to reflect higher market risk

    Declining market rents indicate higher risk of vacancy; the appraiser should increase the vacancy allowance to reflect actual market conditions.

  3. Which of the following items is NOT typically included in a property's operating expenses for FHA appraisal income analysis?

    Answer: Income taxes paid by the property owner

    Income taxes are personal obligations of the owner, not property operating expenses; they are excluded from the operating expense calculation.

  4. An appraiser is using the band of investment technique to develop a cap rate for an FHA appraisal. The mortgage constant is 7.2% (75% LTV) and the equity dividend rate is 9%. What is the overall cap rate?

    Answer: 7.65%

    OAR = (0.75 × 7.2%) + (0.25 × 9.0%) = 5.40% + 2.25% = 7.65%.

  5. Under FHA guidelines, when must an appraiser use actual rents rather than market rents in the income analysis for a 2-4 unit property?

    Answer: Never — market rents are always used to reflect the property's income potential

    FHA requires market rents to assess the property's income potential, regardless of what the owner currently charges.

  6. What is the primary difference between yield capitalization and direct capitalization in FHA income property appraisal?

    Answer: Yield capitalization accounts for changes in income and value over time; direct capitalization uses a single stabilized income stream

    Yield capitalization (DCF) models variable income and reversion over a holding period; direct capitalization converts one stabilized year's income to value.

  7. A property's potential gross income is $48,000. If the operating expense ratio is 45% and the vacancy rate is 6%, what are the annual operating expenses?

    Answer: $20,304

    EGI = $48,000 × 0.94 = $45,120; Operating Expenses = $45,120 × 0.45 = $20,304.