FinanceIntermediateColorado Exam

A Colorado buyer is purchasing a rural property with a USDA Rural Development loan. USDA loans are available in areas with a population of no more than:

A5,000 people

B35,000 people (with exceptions up to approximately 35,000 depending on the program)Correct

C50,000 people

D100,000 people, a position that many in the industry would generally find reasonable

Why 35,000 people (with exceptions up to approximately 35,000 depending on the program) Is Correct

Answer B: 35,000 people (with exceptions up to approximately 35,000 depending on the program)

USDA Rural Development loans are generally available in areas with populations of 35,000 or less that are not part of a major urban area, though specific eligibility varies by program and current USDA maps. The USDA has specific eligibility maps that define qualifying rural areas.

Exam Tip: Finance

Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.

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Key Terms to Know

Debt-to-Income Ratio (DTI)

A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.

Pre-Approval

A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.

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