Products and Programs Flashcards
7 cards from real Mortgage practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Products and Programs flashcards as text
What is the maximum DTI ratio typically allowed for a USDA Guaranteed Loan without compensating factors?
Answer: 41%
USDA Guaranteed Loans generally allow a maximum DTI of 41%, though waivers may be granted with strong compensating factors.
Which mortgage product allows a borrower to draw funds, repay, and redraw during the draw period?
Answer: HELOC
A Home Equity Line of Credit (HELOC) is a revolving credit line that allows repeated borrowing and repayment during the draw period.
A 5/1 ARM means the rate is fixed for the first 5 years, then adjusts every:
Answer: 1 year
In a 5/1 ARM, the '1' indicates the rate adjusts once per year after the initial 5-year fixed period.
The Fannie Mae HomeReady program is designed primarily for:
Answer: Low-to-moderate income borrowers
HomeReady targets low-to-moderate income borrowers and allows income from non-borrower household members to qualify.
Which loan program insures mortgages for properties in rural and suburban areas and requires no down payment?
Answer: USDA Rural Development Loan
The USDA Rural Development Guaranteed Loan program offers 100% financing for eligible rural and suburban properties.
A balloon mortgage typically requires full repayment of the remaining principal:
Answer: At the end of a short term (e.g., 5 or 7 years)
Balloon mortgages have a large lump-sum payment due at the end of a relatively short loan term, often 5 to 7 years.
Which feature of an ARM caps the maximum amount the interest rate can increase at each adjustment?
Answer: Periodic cap
The periodic cap limits how much the interest rate can change at any single adjustment interval.