Qualified, Conventional & Government Programs: practice questions

How long is the seasoning period for a seasoned qualified mortgage, in the ordinary case?

1. 36 months from the first payment due date ✓
2. 12 months from consummation
3. 60 months from the date the first payment is due
4. 24 months from consummation

Why: 12 CFR 1026.43(e)(7)(iv)(C): the seasoning period "means a period of 36 months beginning on the date on which the first periodic payment is due after consummation", extended while a 30-day delinquency is outstanding at the 36th month and excluding certain disaster or emergency accommodations.

Source: 12 CFR 1026.43(e)(7)(iv)

May the VA funding fee be financed in the loan?

1. No; it must be paid in cash by the veteran at or before closing
2. No; it must be paid by the seller as a concession at closing
3. Yes; it may be included in the loan and paid from its proceeds ✓
4. Yes, but only if the veteran also pays two discount points

Why: 38 U.S.C. 3729(a)(2): "The fee may be included in the loan and paid from the proceeds thereof."

Source: 38 U.S.C. 3729(a)(2)

In 2026, a first-lien loan of $300,000 has an APR of 8.80%. The average prime offer rate for a comparable transaction is 6.50%. Can it be a general QM under the price test?

1. Yes; loans of that size may be up to 3.5 points over the APOR
2. Yes; the price test applies only to smaller loans, those below $137,958
3. No; general QMs must have an APR below the APOR itself
4. No; it is 2.30 points over APOR, and the limit is under 2.25 points ✓

Why: Under 12 CFR 1026.43(e)(2)(vi) and comment 43(e)(2)(vi) as updated for 2026 by FR Doc. 2025-22773, for a first-lien loan of $137,958 or more the APR may not exceed APOR "by ... 2.25 or more percentage points". 8.80% - 6.50% = 2.30.

Source: 12 CFR 1026.43(e)(2)(vi); FR Doc. 2025-22773

For a first-lien small-creditor portfolio QM, how far above the APOR must the APR be before it is a higher-priced covered transaction?

1. 1.5 or more percentage points
2. 2.25 or more percentage points
3. 6.5 or more percentage points
4. 3.5 or more percentage points ✓

Why: 12 CFR 1026.43(b)(4) uses "3.5 or more percentage points for a first-lien covered transaction that is a qualified mortgage under paragraph (e)(5), (e)(6), or (f)" and for subordinate liens, against 1.5 for other first liens.

Source: 12 CFR 1026.43(b)(4)

What lien position must an FHA-insured single-family mortgage hold under 24 CFR 203.17?

1. Any lien, if the LTV is low
2. A second lien behind a grant
3. A first lien on the property ✓
4. Whatever the lender prefers

Why: 24 CFR 203.17(e): "The mortgage must be a first lien upon the property that conforms with property standards prescribed by the Commissioner."

Source: 24 CFR 203.17(e)

A creditor wants to offer a fixed-rate QM with a prepayment penalty. What must it also offer?

1. The same kind of loan and term without a penalty, if the consumer likely qualifies ✓
2. A written waiver of the penalty if the home is sold in the first year
3. A lower interest rate, set at least half a point below the rate on the other loan
4. An adjustable-rate loan with no penalty and a shorter loan term

Why: 12 CFR 1026.43(g)(3) requires an alternative without a prepayment penalty that has a rate that cannot increase and the same type of rate, the same loan term, QM payment and points-and-fees conditions, and for which the creditor has a good faith belief the consumer likely qualifies.

Source: 12 CFR 1026.43(g)(3)

What must a creditor verify with third-party records before a loan can be a general qualified mortgage?

1. Only the appraised value, since a QM loan is judged mainly by its collateral
2. Nothing; a general QM is presumed to meet ability to repay unverified
3. Only the borrower's credit score and the length of the credit history
4. Income or assets relied on, and current debts, alimony and child support ✓

Why: 12 CFR 1026.43(e)(2)(v)(B) requires the creditor to verify income or assets (other than the dwelling) under (c)(4) and "the consumer's current debt obligations, alimony, and child support using reasonably reliable third-party records" under (c)(3).

Source: 12 CFR 1026.43(e)(2)(v)

For a general QM with an adjustable rate, which rate must the creditor use when underwriting the payment?

1. The introductory rate that applies on the date of consummation
2. The lifetime cap on the rate, whatever the timing of the adjustments
3. The top rate possible in the five years after the first payment ✓
4. The fully indexed rate at application, ignoring any caps entirely

Why: 12 CFR 1026.43(e)(2)(iv)(A) requires underwriting using "The maximum interest rate that may apply during the first five years after the date on which the first regular periodic payment will be due".

Source: 12 CFR 1026.43(e)(2)(iv)