Mortgage Math and Calculations Flashcards
7 cards from real Mortgage Loan Originator practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Mortgage Math and Calculations flashcards as text
A borrower is purchasing a home for $250,000 and makes a 20% down payment. What is the loan amount?
Answer: $200,000
20% of $250,000 equals a $50,000 down payment; subtracting from the purchase price gives a $200,000 loan amount.
A borrower has a gross monthly income of $6,000. The maximum front-end DTI ratio is 28%. What is the maximum allowable monthly housing payment?
Answer: $1,680
$6,000 × 0.28 = $1,680 maximum monthly housing payment.
A loan has a principal balance of $180,000 at a 6% annual interest rate. What is the monthly interest charge for the first payment?
Answer: $900
$180,000 × 0.06 ÷ 12 = $900 monthly interest for the first payment.
A borrower purchases a home for $320,000 and makes a $40,000 down payment. What is the loan-to-value (LTV) ratio?
Answer: 87.5%
Loan amount = $280,000; LTV = $280,000 ÷ $320,000 = 87.5%.
A borrower has total monthly debt payments of $1,500 and a gross monthly income of $5,000. What is their back-end DTI ratio?
Answer: 30%
$1,500 ÷ $5,000 = 0.30, or a 30% back-end DTI ratio.
A home is appraised at $400,000 but the purchase price is $380,000. Which value is used to calculate LTV for a purchase transaction?
Answer: Purchase price ($380,000)
For purchase transactions, lenders use the lesser of the appraised value or purchase price to calculate LTV.
If a borrower pays 2 discount points on a $200,000 loan, how much does the borrower pay in points?
Answer: $4,000
Each discount point equals 1% of the loan amount; 2 × 1% × $200,000 = $4,000.