What is the exam-ready answer?
| Official syllabus topic | Mortgage Underwriting and Loan Qualification |
|---|---|
| Official PSI area | Financing |
| Published area weight | 10% of the 100-question national portion |
| Exam portion | National salesperson portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes the weight for the complete content area, not a fixed question count for this lesson. Learn the rule well enough to apply it when PSI changes names, numbers, or parties in a new scenario.
The lesson
These ideas work together. On the exam, the wrong answers usually describe a nearby concept, so learn where each one stops.
Capacity and credit
Underwriters verify stable qualifying income and recurring debts to assess repayment capacity, then review credit history and score under the program's standards.
Capital and assets
Funds for down payment, closing costs, and reserves must be documented and sourced as required. Undisclosed borrowing can change qualification.
Collateral
An appraisal helps evaluate value and marketability, while property condition and title information can affect eligibility. Appraised value does not itself approve the borrower.
Ratios and risk controls
Debt-to-income and loan-to-value ratios help measure risk. Mortgage insurance, guarantees, pricing, or added conditions may address higher leverage, subject to program rules.
Decision rule
Georgia-specific distinction
Worked example
Scenario. A buyer receives preapproval, then takes a large auto loan before closing.
Reason it through. The new monthly obligation changes debt ratios and credit risk. Preapproval was conditional, not a promise to fund regardless of later changes.
Answer. The lender may re-underwrite, change terms, or deny the mortgage under applicable rules.
Common exam traps
- Treating preapproval as guaranteed funding
- Assuming appraisal approves credit
- Ignoring new debt before closing
- Using protected-class assumptions
Original practice questions with detailed explanations
These questions were written for instruction and mapped to the current outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1A borrower has gross monthly income of $8,000. The proposed housing payment is $2,000, a car loan is $500 a month, and a student loan is $300 a month. What is the total debt-to-income ratio?
- A. 25%
- B. 31.25%
- C. 35%
- D. 10%
Show answer and explanation →
Answer: C. 35%
Total DTI adds every recurring monthly debt and divides by gross income: $2,800 divided by $8,000 is 35%. The 25% answer uses the housing payment alone, which is the front-end ratio, not the total.
Question 2After a buyer is preapproved, the buyer finances a new truck with a $700 monthly payment two weeks before closing. What is the likely result?
- A. The lender may re-evaluate the loan
- B. The preapproval holds through closing
- C. Only the appraisal must be updated
- D. Nothing changes once preapproved
Show answer and explanation →
Answer: A. The lender may re-evaluate the loan
A preapproval stays conditional until final underwriting, and new debt changes the borrower's ratios and credit profile. Treating preapproval as a promise to fund no matter what is exactly the mistake that derails closings.
Question 3The appraisal comes in at the contract price, and the buyer says, "Great, so the loan is approved." What is accurate?
- A. The appraisal approves the loan once it meets price
- B. The lender must fund because value supports the loan
- C. The appraisal replaces the need for credit review
- D. The appraisal addresses the collateral, not the borrower
Show answer and explanation →
Answer: D. The appraisal addresses the collateral, not the borrower
Underwriting looks at borrower risk and collateral risk separately, and the appraisal speaks only to the property's value. Reading a good appraisal as loan approval is the common trap, since income, debts and credit still have to qualify.
Ready to move on?
You are ready for the next lesson when all of these are true.
- Explain Mortgage Underwriting and Loan Qualification in one clear answer without notes.
- Separate Capacity and credit from Capital and assets using a fresh example.
- Apply the decision rule to a new fact pattern and name the fact that controls the result.
- State the Georgia-specific point or explain why the national rule applies unchanged.
- Answer every practice question and explain the rule each rejected option misapplies.
- Revisit this topic later in mixed practice without category labels.
Recommended next lesson
Continue with Loan Clauses and Default Remedies. Once a loan is approved, its terms live in the note and security deed, and the next lesson explains the clauses that matter most: acceleration, due-on-sale, defeasance, prepayment, subordination, and assumption versus subject-to.
Return to the Financing hub to see every official branch and the complete lesson sequence for this content area.