Qualifying Ratios

Question 1

For conventional mortgage loans that conform to Fannie Mae and Freddie Mac guidelines, the maximum front end ratio has traditionally been what?

Answer 1

28%

Question 2

Applicants for FHA loans must meet a front end ratio of what?

Answer 2

31%

Question 3

Lenders who take VA loans primarily look to what ratio rather than the front end ratio?

Answer 3

The Back end ratio. (Total debt ratio)

Question 4

The back end ration is also called what?

Answer 4

Total debt ration

Question 5

Lenders who make conventional loans that conform to Fannie Mae and Freddie Mac guidelines have traditionally used a maximum back end ratio of what?

Answer 5

36%

Question 6

Applicants for FHA loans must meet a back end ratio of what?

Answer 6

43%

Question 7

The back end ratio for VA loans is?

Answer 7

41%

Question 8

Under the Qualified Mortgage Rule (QM), If the consumers debt to income ratio exceeds 43%, then what?

Answer 8

Then it cannot be considered a “qualified mortgage”

Question 9

What is the main key report needed to come to an accurate Loan to Value calculation?

Answer 9

An Appraisal Report

Question 10

What are the LTV limits for conventional, FHA and VA loans?

Answer 10

Conventional - 80% (any amount higher than this requires PMI)
FHA - 95%
VA - 100%

Question 11

When is a CLTV ratio used?

Answer 11

When a borrower is requesting two loans

Question 12

With a CLTV of more than 80%, what is likely to happen to the interest rate on the second mortgage?

Answer 12

It is likely to be a higher interest rate