Free Florida Finance Practice Test — LicenseIQ

Question 1

A loan on which the borrower pays only interest during the term and repays all principal at maturity is a

Accepted Answer

A term or straight loan is interest-only; the full principal is due at the end. It does not amortize.

Question 2

Which statement about USDA Rural Development guaranteed loans is correct?

Accepted Answer

USDA guaranteed loans allow no down payment for moderate-income buyers (generally up to 115% of area median income) in eligible areas. They carry a 1% upfront guarantee fee and a 0.35% annual fee.

Question 3

Under the Garn-St Germain Act, a lender may generally enforce a due-on-sale clause on a borrower-occupied home when the home is transferred

Accepted Answer

Garn-St Germain bars enforcement of due-on-sale clauses for certain transfers of a borrower-occupied home, including to a spouse or children, on death to a relative, by divorce decree, or into a living trust where the borrower remains a beneficiary. A sale to an unrelated buyer is not protected, so the lender may call the loan.

Question 4

A buyer purchases a $300,000 home with the FHA minimum 3.5% down payment. What is the upfront mortgage insurance premium?

Accepted Answer

Step 1: Down payment = $300,000 x 0.035 = $10,500. Step 2: Base loan = $300,000 - $10,500 = $289,500. Step 3: UFMIP = $289,500 x 0.0175 = $5,066.25. Applying 1.75% to the full price ($5,250) is wrong because UFMIP is based on the base loan amount.

Question 5

A buyer offers $375,000 for a home that appraises at $370,000. The lender will lend 80% LTV. What down payment is required, and what do 2.5 discount points cost?

Accepted Answer

Step 1: LTV uses the lesser of price or value: $370,000 x 0.80 = $296,000 loan. Step 2: Down payment = $375,000 - $296,000 = $79,000. Step 3: Points are on the loan: $296,000 x 0.025 = $7,400. Using the $375,000 price for the loan or points is the trap.

Question 6

Price $350,000; buyer's earnest money $10,000; new loan $280,000; buyer's closing costs $9,200; tax proration $1,850 owed by the seller. How much cash must the buyer bring to closing?

Accepted Answer

Buyer debits: $350,000 + $9,200 = $359,200. Buyer credits: $10,000 + $280,000 + $1,850 = $291,850. Cash due = $359,200 - $291,850 = $67,350. $71,050 wrongly adds the proration as a buyer debit; $69,200 ignores the proration.

Question 7

On an adjustable-rate mortgage, the component of the interest rate that stays the same for the life of the loan is the

Accepted Answer

The fully indexed rate equals index plus margin. The index moves with the market; the margin is the lender's fixed markup.

Question 8

Construction loans are typically disbursed

Accepted Answer

Construction lenders release funds in draws tied to completed and inspected stages, charging interest only on funds disbursed. Permanent (takeout) financing pays off the construction loan.

Question 9

An investor's equity increases as each mortgage payment reduces the loan balance. This benefit is called

Accepted Answer

Equity buildup occurs as loan principal is paid down. Appreciation is an increase in market value; depreciation is a tax deduction or a loss in value; boot is non-like-kind property in an exchange.

Question 10

Under s. 697.02, F.S., a mortgage on Florida real property is

Accepted Answer

Florida is a lien-theory state: s. 697.02 states that a mortgage is a specific lien on the described property and not a conveyance of legal title or of the right of possession. A general lien would attach to all of the debtor's property.

Question 11

Which document establishes a veteran's eligibility for a VA-guaranteed loan?

Accepted Answer

The Certificate of Eligibility (COE) confirms VA entitlement. The Notice of Value (formerly the Certificate of Reasonable Value) is the VA appraisal result. A DD-214 is supporting evidence used to obtain the COE.

Question 12

A veteran using VA loan benefits for the first time buys a home for $350,000 with no down payment and is not exempt from the funding fee. The funding fee is

Accepted Answer

The first-use funding fee with less than 5% down is 2.15%: $350,000 x 0.0215 = $7,525. $11,550 would be the 3.3% subsequent-use rate, and $5,250 would be the 1.5% rate for 5% or more down.

Question 13

The document that creates the borrower's personal liability for a mortgage loan is the

Accepted Answer

The note is the promise to pay and the evidence of the debt, so it creates personal liability. The mortgage only pledges the property as security, and the deed conveys title.

Question 14

A buyer assumes the seller's FHA loan, and the lender agrees in writing to release the seller and substitute the buyer as the only obligor. This release is a

Accepted Answer

A novation substitutes a new party or obligation and releases the original party. Without it, a seller whose loan is assumed remains secondarily liable.

Question 15

A borrower obtains a $240,000, 30-year fixed loan at 6% with a monthly principal-and-interest payment of $1,438.92. What is the loan balance after the first payment?

Accepted Answer

Step 1: First month's interest = $240,000 x 0.06 / 12 = $1,200.00. Step 2: Principal portion = $1,438.92 - $1,200.00 = $238.92. Step 3: New balance = $240,000 - $238.92 = $239,761.08. Subtracting the entire payment ($238,561.08) wrongly treats the interest as principal.

Question 16

In a Florida mortgage foreclosure, the mortgagor's right of redemption generally ends

Accepted Answer

Section 45.0315, F.S. allows redemption until the later of the clerk's filing of the certificate of sale or the time set in the judgment. Florida does not give a post-sale statutory redemption period, so 'one year after the sale' is wrong for residential mortgage foreclosures.

Question 17

A loan's payments are calculated on a 30-year schedule, but the remaining balance is due in full at the end of year 7. This is a

Accepted Answer

Payments reduce principal but not to zero by maturity, leaving a balloon payment, so the loan is partially amortized.

Question 18

Which entity guarantees mortgage-backed securities backed by FHA and VA loans but does not purchase loans?

Accepted Answer

Ginnie Mae, a government corporation within HUD, guarantees timely payment on MBS backed by FHA, VA, and USDA loans with the full faith and credit of the U.S. It does not buy loans. Fannie Mae and Freddie Mac purchase loans.

Question 19

For 2026, the baseline conforming loan limit for a one-unit property in most of the United States is

Accepted Answer

FHFA set the 2026 baseline at $832,750, up from $806,500 in 2025. $1,249,125 is the high-cost area ceiling.

Question 20

A Tampa home sells for $400,000. The buyer assumes the seller's $150,000 mortgage and pays the balance in cash. What is the documentary stamp tax on the deed?

Accepted Answer

Deed stamps are based on total consideration, which includes an assumed mortgage. 4,000 x $0.70 = $2,800. $1,750 taxes only the $250,000 cash; $1,050 applies $0.70 to the assumed loan only.

Question 21

The minimum down payment for an FHA-insured purchase loan for a borrower with a credit score of 620 is

Accepted Answer

FHA requires 3.5% down for borrowers with credit scores of 580 or higher, and 10% for scores of 500 to 579. VA and USDA loans, not FHA, allow 0% down.

Question 22

A seller carries back a $96,000 purchase-money note and mortgage that is recorded in Florida. What are the documentary stamp tax on the note and the intangible tax?

Accepted Answer

Step 1: Note stamps = $96,000 / $100 = 960 units x $0.35 = $336. Step 2: Intangible tax = $96,000 x 0.002 = $192. Seller-carried mortgages are taxed the same as institutional loans; $672 would wrongly apply the $0.70 deed rate.

Question 23

A mortgage that covers a furnished condominium unit together with its furniture and appliances is a

Accepted Answer

A package mortgage secures real property plus personal property such as furniture and appliances.

Question 24

Florida Housing Finance Corporation homebuyer programs are generally accessed by

Accepted Answer

Florida Housing works through a network of participating lenders, which originate the first mortgages and any down payment assistance. Florida Housing does not take loan applications directly from buyers.

Question 25

The mortgage clause that requires the lender to release the lien once the debt is paid in full is the

Accepted Answer

Defeasance means payment defeats the lender's interest, so the lien must be released. In Florida, s. 701.04 requires the satisfaction to be recorded within 60 days. A lock-in clause prohibits prepayment, and an open-end clause allows future advances.

Florida real estate finance practice test

1. A loan on which the borrower pays only interest during the term and repays all principal at maturity is a

2. Which statement about USDA Rural Development guaranteed loans is correct?

3. Under the Garn-St Germain Act, a lender may generally enforce a due-on-sale clause on a borrower-occupied home when the home is transferred

4. A buyer purchases a $300,000 home with the FHA minimum 3.5% down payment. What is the upfront mortgage insurance premium?

5. A buyer offers $375,000 for a home that appraises at $370,000. The lender will lend 80% LTV. What down payment is required, and what do 2.5 discount points cost?

6. Price $350,000; buyer's earnest money $10,000; new loan $280,000; buyer's closing costs $9,200; tax proration $1,850 owed by the seller. How much cash must the buyer bring to closing?

7. On an adjustable-rate mortgage, the component of the interest rate that stays the same for the life of the loan is the

8. Construction loans are typically disbursed

9. An investor's equity increases as each mortgage payment reduces the loan balance. This benefit is called

10. Under s. 697.02, F.S., a mortgage on Florida real property is

11. Which document establishes a veteran's eligibility for a VA-guaranteed loan?

12. A veteran using VA loan benefits for the first time buys a home for $350,000 with no down payment and is not exempt from the funding fee. The funding fee is

13. The document that creates the borrower's personal liability for a mortgage loan is the

14. A buyer assumes the seller's FHA loan, and the lender agrees in writing to release the seller and substitute the buyer as the only obligor. This release is a

15. A borrower obtains a $240,000, 30-year fixed loan at 6% with a monthly principal-and-interest payment of $1,438.92. What is the loan balance after the first payment?

16. In a Florida mortgage foreclosure, the mortgagor's right of redemption generally ends

17. A loan's payments are calculated on a 30-year schedule, but the remaining balance is due in full at the end of year 7. This is a

18. Which entity guarantees mortgage-backed securities backed by FHA and VA loans but does not purchase loans?

19. For 2026, the baseline conforming loan limit for a one-unit property in most of the United States is

20. A Tampa home sells for $400,000. The buyer assumes the seller's $150,000 mortgage and pays the balance in cash. What is the documentary stamp tax on the deed?

21. The minimum down payment for an FHA-insured purchase loan for a borrower with a credit score of 620 is

22. A seller carries back a $96,000 purchase-money note and mortgage that is recorded in Florida. What are the documentary stamp tax on the note and the intangible tax?

23. A mortgage that covers a furnished condominium unit together with its furniture and appliances is a

24. Florida Housing Finance Corporation homebuyer programs are generally accessed by

25. The mortgage clause that requires the lender to release the lien once the debt is paid in full is the

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