Mortgage Loan Originator Loan Underwriting and Processing

Question 1

What does the acronym 'DTI' stand for in mortgage underwriting?

Accepted Answer

Debt-to-income

Answer

DTI (debt-to-income) ratio compares a borrower's monthly debt obligations to gross monthly income and is a key underwriting metric.

Question 2

Under conventional underwriting guidelines, the maximum back-end DTI ratio typically allowed without compensating factors is:

Accepted Answer

43%

Answer

Conventional loans typically use a 43% back-end DTI as the standard maximum, though DU/LP may approve higher ratios with strong compensating factors.

Question 3

What is the minimum FICO credit score required for FHA loan eligibility with 3.5% down payment?

Accepted Answer

580

Answer

FHA guidelines allow a 3.5% minimum down payment for borrowers with credit scores of 580 or higher; scores between 500-579 require 10% down.

Question 4

In mortgage underwriting, 'seasoning' of funds typically refers to:

Accepted Answer

How long funds have been in the borrower's account

Answer

Seasoned funds are those that have been in the borrower's account for a sufficient period (typically 60 days) to verify they are not borrowed or undisclosed gifts.

Question 5

Which automated underwriting system (AUS) is used by Fannie Mae?

Accepted Answer

Desktop Underwriter (DU)

Answer

Fannie Mae's automated underwriting system is Desktop Underwriter (DU), while Freddie Mac uses Loan Product Advisor (LPA, formerly LP).

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Loan Underwriting and Processing