Mortgage Underwriting and Qualification 3

Question 1

Which credit score model is most commonly used by mortgage lenders in the U.S.?

Accepted Answer

FICO Mortgage Score (Versions 2, 4, 5)

Answer

Mortgage lenders typically use FICO Score versions 2, 4, and 5 from the three major bureaus, which are mortgage-specific scoring models.

Question 2

What is the minimum credit score generally required for an FHA loan with a 3.5% down payment?

Accepted Answer

580

Answer

FHA requires a minimum 580 credit score for the 3.5% down payment option; scores between 500–579 require 10% down.

Question 3

In underwriting, what does 'seasoning' of funds refer to?

Accepted Answer

How long funds have been in the borrower's account

Answer

Seasoning refers to how long assets have been in the borrower's account — typically 60 days — proving they are not borrowed funds.

Question 4

Which of the following is NOT counted in a borrower's monthly debt obligations for DTI calculation?

Accepted Answer

Car insurance premiums

Answer

Insurance premiums are not installment or revolving debts, so they are excluded from the back-end DTI calculation.

Question 5

What triggers an automated underwriting system (AUS) to require manual underwriting?

Accepted Answer

A 'Refer' or 'Caution' finding from the AUS

Answer

When AUS returns a 'Refer' (Fannie Mae) or 'Caution' (Freddie Mac) finding, the file must be manually reviewed by an underwriter.

Mortgage Practice Test