Mortgage Mortgage Underwriting and Qualification Questions and Answers 2

Question 1

What is the maximum debt-to-income (DTI) ratio typically allowed for a qualified mortgage under the ATR/QM rule?

Accepted Answer

43%

Answer

Under the Ability-to-Repay/Qualified Mortgage rule, the general DTI limit for a qualified mortgage is 43%.

Question 2

Which of the following would an underwriter consider a compensating factor when a borrower has a slightly high DTI ratio?

Accepted Answer

Significant cash reserves after closing

Answer

Substantial cash reserves demonstrate financial stability and can offset a higher DTI ratio in underwriting.

Question 3

In mortgage underwriting, what does CAIVRS stand for and what is its purpose?

Accepted Answer

Credit Alert Interactive Voice Response System — checks for federal debt defaults

Answer

CAIVRS is a federal database that alerts lenders if a borrower has defaulted on federal debt obligations such as FHA loans or student loans.

Question 4

When underwriting a self-employed borrower, how many years of tax returns are typically required?

Accepted Answer

2 years

Answer

Underwriters generally require two years of personal and business tax returns to establish a reliable income pattern for self-employed borrowers.

Question 5

What is the purpose of a Verification of Employment (VOE) in the underwriting process?

Accepted Answer

To confirm the borrower's current employment status, position, and income

Answer

A VOE confirms that the borrower is currently employed and verifies their job title, tenure, and income as stated on the application.

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