A borrower wants to purchase a home in a town with a population of 40,000 people. Which factor would most likely determine USDA eligibility for this property?
Correct Answer
B) The specific USDA rural designation for that area
USDA eligibility is determined by specific rural designations, not just population size. While towns over 35,000 are generally ineligible, some areas with populations between 10,000-35,000 may qualify if they are rural in character and not part of a metropolitan area. The specific USDA designation is what matters.
Why This Is the Correct Answer
USDA eligibility is determined by specific rural designations, not just population size. While towns over 35,000 are generally ineligible, some areas with populations between 10,000-35,000 may qualify if they are rural in character and not part of a metropolitan area. The specific USDA designation is what matters.
More Mortgage Knowledge Questions
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
A borrower refinances their home with a cash-out refinance loan of $750,000. The original loan balance was $400,000, and they're taking $300,000 in cash. If conforming limits allow $766,550, how is this loan classified?
Under TRID regulations, discount points must be disclosed on the Loan Estimate in which section?
During the draw period of a HELOC, what type of payments are borrowers typically required to make?
A borrower has a credit card with a $10,000 balance and $200 minimum monthly payment. They plan to pay off $8,000 of the balance before closing, leaving a $2,000 balance with a $40 minimum payment. How should this be calculated for DTI purposes?
A lender packages a $500,000 conventional loan that meets all current GSE standards but was originated using outdated underwriting software that didn't verify employment in the required manner. This loan would be:
An ARM uses the 1-year Treasury index, which is currently at 2.1%. The margin is 2.75%, but the loan has a floor rate of 5.5%. What rate will the borrower pay?
People Also Study
Federal Mortgage-Related Laws
23% of exam
Mortgage Loan Origination Activities
25% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam
Related Study Resources
Previous Question
A condominium project has 85% of its units sold to owner-occupants and 15% to investors. The project has been approved by FHA for 2 years. A borrower wants to purchase a unit with an FHA loan. What additional requirement must be met?
Next Question
A lender charges a borrower 1.5% of the loan amount as an origination fee on a $300,000 loan. What is the origination fee?