Mortgage Underwriting and Financial 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 $500 monthly car payment and a $250 monthly student loan payment.
What is the borrower's back-end debt-to-income (DTI) ratio?

Accepted Answer

41%

Answer

30%

Answer

37%

Answer

45%

Question 2

When an underwriter is calculating the qualifying income for a self-employed borrower, which method is most commonly used?

Accepted Answer

Averaging the net income shown on their federal tax returns over the most recent 24-month period.

Answer

Using the net profit from the most recent quarter's P&L statement.

Answer

Using the gross deposits from the last 12 months of business bank statements.

Answer

Taking the gross revenue from the most recent year and subtracting a standard 50% expense factor.

Question 3

A home is under contract for a purchase price of $500,000, and the borrower intends to make a down payment of $100,000. The property's appraisal comes back with a value of $480,000. What is the loan-to-value (LTV) ratio that the lender will use for underwriting?

Accepted Answer

83.3%

Answer

80.0%

Answer

85.0%

Answer

90.0%

Question 4

Which of the following calculations specifically measures the percentage of a borrower's gross monthly income that would be used for the proposed PITI (Principal, Interest, Taxes, and Insurance)?

Accepted Answer

Housing Expense Ratio (Front-End Ratio)

Answer

Combined Loan-to-Value (CLTV) Ratio

Answer

Back-End Debt-to-Income (DTI) Ratio

Answer

Net Tangible Benefit Calculation

Question 5

An underwriter is evaluating a borrower who receives $1,500 per month in non-taxable Social Security benefits. To better reflect the borrower's purchasing power, the underwriter applies a 25% 'gross up' to this income. What is the resulting monthly qualifying income from this source?

Accepted Answer

$1,875

Answer

$1,500

Answer

$1,750

Answer

$2,000

Question 6

A borrower has a primary mortgage with a balance of $300,000 and is applying for a home equity line of credit (HELOC) for $50,000. The property's appraised value is $450,000. Which financial calculation is used to assess the total debt secured by the property against its value?

Accepted Answer

Combined Loan-to-Value (CLTV) Ratio

Answer

Loan-to-Value (LTV) Ratio

Answer

Total Debt-to-Income (DTI) Ratio

Answer

Housing Expense Ratio

A borrower has a gross monthly income of $7,000.Their proposed monthly housing expense (PITI) is $2,100.They also have a $500 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 $500 monthly car payment and a $250 monthly student loan payment.
What is the borrower's back-end debt-to-income (DTI) ratio?