NMLS Loan Application and Qualification 3

Question 1

Under the Ability-to-Repay (ATR) rule, which of the following is NOT one of the eight factors a lender must consider?

Accepted Answer

Borrower's investment portfolio performance

Answer

The ATR rule requires consideration of eight specific factors including income, debts, and employment, but a borrower's investment portfolio performance is not one of them.

Question 2

A borrower applies for a $300,000 loan on a property appraised at $375,000. What is the loan-to-value (LTV) ratio?

Accepted Answer

80%

Answer

$300,000 divided by $375,000 equals 0.80, or an 80% LTV ratio.

Question 3

Which type of income is typically averaged over 24 months for qualifying purposes on a mortgage application?

Accepted Answer

Overtime and bonus income

Answer

Variable income types such as overtime, bonuses, and commissions are averaged over 24 months to determine a stable qualifying figure.

Question 4

What is the purpose of the Uniform Residential Loan Application (URLA), also known as Fannie Mae Form 1003?

Accepted Answer

To collect standardized borrower financial and property information

Answer

The URLA (Form 1003) is the standardized application used to collect borrower income, asset, liability, and property information needed for underwriting.

Question 5

For FHA loans, what is the maximum allowable back-end DTI ratio under standard guidelines?

Accepted Answer

50%

Answer

FHA guidelines allow a back-end DTI up to 50% with compensating factors, though 43% is the standard threshold without compensating factors.

(NMLS) National Mortgage Licensing System Practice Test

(NMLS) National Mortgage Licensing System Practice Test

NMLS Loan Application and Qualification 3