Financing Exam Questions
Financing is one of the most heavily weighted exam topics at 12%, covering the entire lending process from loan types (conventional, FHA, VA, USDA) to federal regulations (RESPA, TILA, ECOA) and the secondary mortgage market. This topic requires understanding both the practical aspects of mortgage origination and the regulatory framework that governs lending practices. Key concepts include loan-to-value ratios, PMI requirements, the difference between mortgage and deed of trust states, and prohibited practices under RESPA. Math questions related to financing — such as interest calculations, LTV ratios, and amortization — appear frequently and represent some of the most concrete, scoreable items on the exam.
What You Need to Know About Financing
Financing is one of the most heavily weighted exam topics, covering the entire lending process from application to closing. This topic requires understanding different loan types, lending regulations, and financial calculations that agents encounter daily in practice.
Start by mastering the major loan types: conventional loans (conforming and jumbo), FHA loans (lower down payment, MIP required), VA loans (no down payment for eligible veterans), and USDA rural development loans. Know the key requirements for each — FHA requires 3.5% down and mortgage insurance, VA loans require a Certificate of Eligibility, and conventional loans typically need 20% down to avoid PMI.
Federal lending regulations are heavily tested: RESPA (Real Estate Settlement Procedures Act) prohibits kickbacks and unearned fees; TILA (Truth in Lending Act) requires APR disclosure and provides a right of rescission; ECOA (Equal Credit Opportunity Act) prevents discrimination in lending. Understanding the secondary mortgage market is also important — know what Fannie Mae, Freddie Mac, and Ginnie Mae do and how they keep mortgage funds flowing.
- Know the key differences: FHA (3.5% down, MIP), VA (0% down, veterans), Conventional (20% to avoid PMI)
- RESPA prohibits kickbacks; TILA requires APR disclosure; ECOA prevents lending discrimination
- Practice LTV ratio calculations: LTV = Loan Amount ÷ Appraised Value
- Understand the secondary market: Fannie Mae, Freddie Mac, Ginnie Mae roles
Sample Financing Questions
200+ in bankWest Virginia redemption period is:
Private Mortgage Insurance (PMI) is typically required when:
Points paid at closing are:
A cooperative in Manhattan is converting to a condominium. How does this conversion affect existing shareholders with share loans?
Young man purchasing move-in-ready model home in new subdivision. Developer offers to sell model furniture with real estate. Both serve as collateral. This is:
Two buyers cannot afford down payment on 3-unit residence. Government program requires mortgage default insurance, permits 3.5% down payment. They used:
Security instrument for real estate loans, legally infrequent in California, with two parties creating encumbrance. What is it called?
Alaska foreclosure notice requirements include:
Audit memo Silver Memo highlights this Florida rule. A lender will lend up to 80% loan-to-value. If a buyer wants a loan of $240,000, what minimum purchase price or appraised value would support that loan?
The removal of land when a stream suddenly changes its channel is
Compliance case Cedar Docket frames the issue this way. A Florida buyer borrows $272,000 on a purchase price of $320,000. What is the loan-to-value ratio?
Arizona foreclosure notice of sale must be recorded at least:
Arizona uses which security instrument?
Which of these activities can the owner of a life estate NOT do?
Generally, things or objects of a temporary or easily movable nature are
Frequently Asked Questions
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