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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
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B) The installment debt is generally not counted when 10 or fewer payments remain unless the payment is high
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C) The installment debt may be excluded only if paid off before closing
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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
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B) The lease payment is excluded if the borrower intends to return the vehicle
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C) The lease payment must be included regardless of remaining payments
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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
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B) The payments are excluded if paid by payroll deduction
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C) The payments must be included if more than 10 payments remain
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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
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B) Child care is included only if court ordered
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C) Child care must be included when both spouses work full-time
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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
Correct Incorrect Correct answer

B) The payment is excluded with a letter of explanation
Correct Incorrect Correct answer

C) The payment must be included unless proof shows another party pays
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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
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B) The loss is offset by appreciation
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C) The negative cash flow must be included
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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
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B) Bank statements only
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C) Audited or unaudited profit and loss statement
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D) Employer verification
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Correct

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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
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B) Capital gains are never acceptable
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C) Capital gains may be used if properly documented
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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
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B) Verbal verification is acceptable
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C) Two years of tax returns including Schedule D are required
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D) Capital gains cannot be averaged
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