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 bankCompliance 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?
A lender in Montgomery is considering whether to initiate foreclosure on a defaulting borrower's residential property. The borrower has missed six consecutive mortgage payments. Under Alabama law, which step must the lender complete FIRST before the property can be sold at a foreclosure sale?
In Delaware financing, which theory is practiced?
Audit memo Cedar Case highlights this Florida rule. The purchase price is $360,000, and the lender will lend 90% of the price. How much cash down payment must the buyer bring?
A California buyer is comparing two deed of trust loan offers. Loan A has a 5.5% interest rate with 0 points. Loan B has a 5% interest rate with 2 points. Which tool required by federal law helps the buyer compare the true cost of these two loans?
A Florida real estate licensee is helping a buyer understand loan-to-value ratios. The buyer asks about the maximum LTV typically allowed for conventional loans without private mortgage insurance (PMI). What should the licensee explain?
A borrower in Greenville, South Carolina defaults on her mortgage payments. The lender wants to recover the property. Which process must the lender follow under South Carolina law?
Tom defaults on his mortgage in Fargo, North Dakota. His lender, Heartland Savings, wants to foreclose. Which of the following correctly describes the foreclosure process Heartland Savings must follow under North Dakota law?
Under Alaska's Deed of Trust Act (AS 34.20.070–34.20.135), which of the following is NOT a required party to a deed of trust?
James Wilson's share loan application for a co-op in Staten Island was approved. What will secure this loan?
Tennessee has which redemption period after foreclosure?
Private Mortgage Insurance (PMI) is typically required on a conventional loan when the loan-to-value (LTV) ratio exceeds what threshold?
A homeowner in Oklahoma City is purchasing a property with a sales price of $320,000. The buyer is obtaining a conventional loan with a 20% down payment. The lender charges an origination fee of 1.5% of the loan amount. What is the total origination fee the buyer will pay at closing?
Deficiency judgments in Alabama are:
Sarah Martinez is purchasing a co-op apartment in Manhattan for $750,000. Her lender explains the financing structure for cooperative units. What type of loan will Sarah receive for this co-op purchase?
Frequently Asked Questions
What is Financing in real estate?
How many Financing questions are on the real estate exam?
What percentage of the exam covers Financing?
How to study Financing for the real estate exam?
What are common mistakes on Financing exam questions?
Explore Other Topics
NAR settlement rules, buyer agency agreements, and compensation requirements (2024-2026 updates)
Types of property ownership, estates, and interests in real property
Zoning, building codes, environmental regulations, and land use planning
Appraisal methods, comparative market analysis, and property valuation
Ready to Master Financing?
Create a free account to track your progress, get personalized recommendations, and access all 200+ Financing questions.
Get Started Free