Mortgage Underwriting and Qualification Questions and Answers

Question 1

An underwriter is calculating a borrower's front-end debt-to-income ratio (DTI). Which of the following components is exclusively included in this calculation?

Accepted Answer

The estimated monthly principal, interest, taxes, and insurance (PITI) for the new mortgage

Answer

Student loan payments

Answer

Monthly car loan payments

Answer

Minimum monthly credit card payments

Question 2

A borrower is purchasing a home for $400,000. They have a first mortgage of $320,000 and a simultaneous second mortgage (HELOC) for $40,000 to cover part of the down payment. What is the Combined Loan-to-Value (CLTV) ratio?

Accepted Answer

90%

Answer

80%

Answer

85%

Answer

100%

Question 3

Which of the following best describes the primary advantage of an Automated Underwriting System (AUS) in the mortgage qualification process?

Accepted Answer

It offers a rapid and consistent initial risk assessment based on established guidelines.

Answer

It guarantees loan approval for all applicants.

Answer

It provides a detailed analysis of a property's physical condition.

Answer

It replaces the need for a property appraisal.

Question 4

For a VA loan, an underwriter determines that a veteran's debt-to-income ratio exceeds the general 41% benchmark. Which of the following could be a significant compensating factor allowing the loan to still be approved?

Accepted Answer

Sufficient residual income that exceeds the VA's regional requirements.

Answer

Having a high credit score from only one credit bureau.

Answer

A small increase in the proposed housing payment compared to their current rent.

Answer

A letter of explanation for a single 30-day late payment two years ago.

Question 5

A lender must downgrade an FHA loan application that received an 'Approve/Eligible' recommendation from the TOTAL Scorecard to a manual underwrite. Which of the following situations would trigger this requirement?

Accepted Answer

The borrower's credit report shows a total of $1,500 in disputed derogatory accounts.

Answer

The borrower is making a 10% down payment.

Answer

The borrower has been at their current job for five years.

Answer

The property is a single-family residence.

Question 6

A borrower wishes to purchase a home but has only a 10% down payment and wants to avoid paying private mortgage insurance (PMI). Which financing structure would help them achieve this goal?

Accepted Answer

An 80-10-10 piggyback loan.

Answer

A single conventional loan with an 90% LTV.

Answer

An FHA loan.

Answer

A jumbo loan.