Mortgage Loan Originator Mortgage Math and Calculations

Question 1

A borrower is purchasing a home for $250,000 and makes a 20% down payment. What is the loan amount?

Accepted Answer

$200,000

Answer

20% of $250,000 equals a $50,000 down payment; subtracting from the purchase price gives a $200,000 loan amount.

Question 2

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?

Accepted Answer

$1,680

Answer

$6,000 × 0.28 = $1,680 maximum monthly housing payment.

Question 3

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?

Accepted Answer

$900

Answer

$180,000 × 0.06 ÷ 12 = $900 monthly interest for the first payment.

Question 4

A borrower purchases a home for $320,000 and makes a $40,000 down payment. What is the loan-to-value (LTV) ratio?

Accepted Answer

87.5%

Answer

Loan amount = $280,000; LTV = $280,000 ÷ $320,000 = 87.5%.

Question 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?

Accepted Answer

30%

Answer

$1,500 ÷ $5,000 = 0.30, or a 30% back-end DTI ratio.

Mortgage Loan Originator Practice Test