Sec4-P40 2

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Question 1 of 9

1. Question
A borrower applying for a mortgage has an installment loan with eight remaining payments. The loan originator reviews whether this debt must be included when calculating qualifying ratios.
- A) The installment debt must always be included regardless of remaining payments
- B) The installment debt is generally not counted when 10 or fewer payments remain unless the payment is high
- C) The installment debt may be excluded only if paid off before closing
- D) The installment debt is excluded only with a letter of explanation
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Question 2 of 9

2. Question
A borrower leases a vehicle and has only three payments remaining. The loan originator evaluates whether this obligation must be included in qualifying ratios.
- A) The lease payment may be excluded due to the short remaining term
- B) The lease payment is excluded if the borrower intends to return the vehicle
- C) The lease payment must be included regardless of remaining payments
- D) The lease payment may be excluded with documentation
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Question 3 of 9

3. Question
A borrower is required to pay alimony and child support for another six years. The loan originator reviews whether this obligation must be included in qualifying ratios.
- A) The payments are excluded if voluntarily paid
- B) The payments are excluded if paid by payroll deduction
- C) The payments must be included if more than 10 payments remain
- D) The payments are never included
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Question 4 of 9

4. Question
A VA borrower and spouse both work full-time and pay monthly child care expenses. The loan originator evaluates whether this expense must be included.
- A) Child care is excluded for VA loans
- B) Child care is included only if court ordered
- C) Child care must be included when both spouses work full-time
- D) Child care is optional at the loan originator’s discretion
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Question 5 of 9

5. Question
A borrower co-signed a loan for a relative but states they do not make the payments. The loan originator reviews whether this obligation must be counted.
- A) The payment is always excluded
- B) The payment is excluded with a letter of explanation
- C) The payment must be included unless proof shows another party pays
- D) The payment is excluded after 12 months
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Question 6 of 9

6. Question
A borrower owns rental property that produces a monthly loss. The loan originator evaluates how this affects qualifying.
- A) The loss is ignored
- B) The loss is offset by appreciation
- C) The negative cash flow must be included
- D) The loss is excluded if reserves are sufficient
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Question 7 of 9

7. Question
A self-employed borrower applies for a mortgage and submits income documentation. The loan originator reviews what is required.
- A) Pay stubs only
- B) Bank statements only
- C) Audited or unaudited profit and loss statement
- D) Employer verification
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Question 8 of 9

8. Question
A borrower wants to use capital gains income to qualify for a loan. The loan originator reviews whether this income may be used.
- A) Capital gains are always acceptable
- B) Capital gains are never acceptable
- C) Capital gains may be used if properly documented
- D) Capital gains replace earned income
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Question 9 of 9

9. Question
A borrower relies on capital gains income to qualify for a mortgage. The loan originator reviews documentation requirements.
- A) One year of tax returns is sufficient
- B) Verbal verification is acceptable
- C) Two years of tax returns including Schedule D are required
- D) Capital gains cannot be averaged
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