Chapter 11 Quiz: Government Programs - FHA and VA Loans

Question 1

The statutory FHA down payment is:

a. 2%
b. 3.5%
c. 4%
d. 5%

Answer 1

b. 3.5% (p. 292)

The 3.5% cash down payment is generally less than for a similar conventional loan.

Question 2

The FHA maximum debt-to-income ratios:

a. may not exceed 31% of the gross monthly income and 43% of the monthly debt
b. may not exceed 25% of the gross monthly income and 29% of the monthly debt
c. may not exceed 43% of the gross monthly income and 52% of the monthly debt
d. none of the above

Answer 2

a. may not exceed 31% of the gross monthly income and 43% of the monthly debt (p. 294)

Question 3

The current “basic” maximum entitlement for a VA loan guaranty is:

a. $240,000
b. $144,000
c. $36,000
d. none of the above

Answer 3

c. $36,000 (p. 299)

The G.I. Bill is the legislation that provides for “basic” VA loan guaranty on the first $36,000 of loss.

Question 4

What FHA loan program is designed to allow homeowners to finance “light repairs or permanent improvements” to their homes?

a. Title I
b. Title II
c. Title III
d. all of the above

Answer 4

a. Title I (p. 298)

Question 5

After an appraisal inspection, an FHA lender must give the borrower a:

a. Certificate of Eligibility
b. Valuation Conditions Form
c. Certificate of Reasonable Value
c. Uniform Residential Appraisal Report (URAR)

Answer 5

c. Uniform Residential Appraisal Report (URAR) (p. 293)

The lender is required to obtain an appraisal of the property from an FHA-approved appraiser. The appraiser will not any major health and safety deficiencies on the Uniform Residential Appraisal Report (URAR).

Question 6

The program that permits rehabilitation costs to be included with acquisition costs is:

a. Title I
b. FHA 203b
c. FHA 203k
d. all of the above

Answer 6

c. FHA 203k (p. 295)

Question 7

Both FHA and VA loans can be made to owner-occupied properties of:

a. one to five unit residences
b. one to four unit family residences
c. two to five unit family residences
d. three to six unit family residences

Answer 7

b. one to four unit family residences (p. 295)

Question 8

What minimum amount in needed property repairs qualifies for a 203k loan?

a. $20,000
b. $5,000
c. $10,000
d. none of the above

Answer 8

b. $5,000 (p. 297)

Question 9

The maximum origination fee for both FHA and VA loans is:

a. 1%
b. 1.5%
c. 2%
d. none of the above

Answer 9

a. 1% (p. 299)

Question 10

On 30-year FHA loans with an original LTV of 90% or less, the Mortgage Insurance Premium (MIP) may be cancelled when the loan balance:

a. drops to 78% of the original purchase price and timely loan payments for 11 years
b. drops to 80% of the original purchase price and loan payments for 5 years
c. payments have been made for 10 years
d. none of the above

Answer 10

a. drops to 78% of the original purchase price and timely loan payments for 11 years (p. 294)