Mortgage Products and Programs 2

Question 1

What is the maximum DTI ratio typically allowed for a USDA Guaranteed Loan without compensating factors?

Accepted Answer

41%

Answer

USDA Guaranteed Loans generally allow a maximum DTI of 41%, though waivers may be granted with strong compensating factors.

Question 2

Which mortgage product allows a borrower to draw funds, repay, and redraw during the draw period?

Accepted Answer

HELOC

Answer

A Home Equity Line of Credit (HELOC) is a revolving credit line that allows repeated borrowing and repayment during the draw period.

Question 3

A 5/1 ARM means the rate is fixed for the first 5 years, then adjusts every:

Accepted Answer

1 year

Answer

In a 5/1 ARM, the '1' indicates the rate adjusts once per year after the initial 5-year fixed period.

Question 4

The Fannie Mae HomeReady program is designed primarily for:

Accepted Answer

Low-to-moderate income borrowers

Answer

HomeReady targets low-to-moderate income borrowers and allows income from non-borrower household members to qualify.

Question 5

Which loan program insures mortgages for properties in rural and suburban areas and requires no down payment?

Accepted Answer

USDA Rural Development Loan

Answer

The USDA Rural Development Guaranteed Loan program offers 100% financing for eligible rural and suburban properties.

Mortgage Practice Test