Free Texas Real Estate Practice Test (2026) — LicenseIQ

Question 1

Which loan is insured by the federal government and allows a low down payment?

Accepted Answer

FHA loans are insured by the Federal Housing Administration and permit down payments as low as 3.5%. Conventional loans are not government-backed.

Question 2

A religious organization operating housing for non-commercial purposes may give preference to members of its own religion, but it may NOT:

Accepted Answer

Religious organizations and private clubs have partial exemptions, but cannot discriminate on other protected classes, and the religion itself cannot restrict membership by race, color or national origin.

Question 3

Which federal law requires disclosure of the true cost of credit, including APR?

Accepted Answer

The Truth in Lending Act (Regulation Z) requires disclosure of finance charges and the APR. RESPA covers settlement costs.

Question 4

Which advertising practice is misleading under TREC rules?

Accepted Answer

TREC identifies 'Just Sold' marketing that implies involvement in other licensees' sales as creating a misleading impression. The other practices are permitted.

Question 5

At an open house, a buyer begins telling the listing agent the most he could pay. The agent should first:

Accepted Answer

Agents must disclose up front whom they represent so customers don't mistakenly share confidential information - anything the agent learns must be shared with the client.

Question 6

A borrower's monthly payment does not cover the interest due, and the unpaid interest is added to the loan balance. This is:

Accepted Answer

When unpaid interest is added to principal, the balance grows - negative amortization. An interest-only loan pays all interest, so the balance stays flat.

Question 7

Which Article of the NAR Code of Ethics requires REALTORS not to deny equal professional services or discriminate on protected characteristics?

Accepted Answer

Article 10 addresses equal professional services and fair housing. Article 1 covers duties to clients, Article 3 cooperation and Article 17 arbitration.

Question 8

The approach to value most appropriate for an office building or apartment complex is the:

Accepted Answer

Income-producing properties are valued by the income approach: Value = NOI / capitalization rate.

Question 9

A person who dies with a valid will is said to have died:

Accepted Answer

Testate = with a will (testator); intestate = without a will, so state descent laws apply; escheat occurs only if there is no will and no heirs.

Question 10

Rights of an owner whose land borders a flowing river are called:

Accepted Answer

Riparian rights pertain to land along a flowing waterway; littoral rights pertain to lakes and oceans. (Reclassified from section 16 to section 1 / CORE - a general principle.)

Question 11

On a property condition disclosure form, if a seller does not know the age of the roof, the seller should:

Accepted Answer

Only the seller completes the form, reporting what is known and stating when something is unknown; guessing creates liability.

Question 12

To whom does the buyer deliver the earnest money under the TREC resale contract?

Accepted Answer

Earnest money and the option fee are made payable to and delivered to the escrow agent, usually a title company.

Question 13

A buyer purchases a $300,000 home with an 80% loan, pays 1 point on the loan, a $450 appraisal and $1,800 in title charges, and has already deposited $10,000 earnest money. How much must the buyer bring to closing?

Accepted Answer

Down payment = $60,000; 1 point = $240,000 x 0.01 = $2,400; total = $60,000 + $2,400 + $450 + $1,800 = $64,650; minus $10,000 earnest money = $54,650.

Question 14

The buyer delivers the earnest money on time but delivers the option fee 2 days late. What is the effect?

Accepted Answer

If the option fee is not timely delivered, the buyer does not get the unrestricted right to terminate under Paragraph 5. The contract otherwise continues.

Question 15

A property assessed at $365,000 is taxed at $2.85 per $100 of assessed value. What is the annual tax?

Accepted Answer

$365,000 / 100 = 3,650 units; 3,650 x $2.85 = $10,402.50.

Question 16

In which situation is a license holder NOT required to provide the IABS?

Accepted Answer

The statute excuses the notice for a residential lease of less than one year when a sale is not being considered. A 2-year lease falls outside that exception.

Question 17

A home sells for $400,000 with a 5% total commission. What is the total commission?

Accepted Answer

$400,000 x 0.05 = $20,000.

Question 18

A property use that legally existed before a new zoning ordinance and is allowed to continue is a:

Accepted Answer

A legal nonconforming ('grandfathered') use predates the ordinance and may continue, usually with limits on expansion. A variance is permission to deviate from a current requirement.

Question 19

The buyer fails to deliver the earnest money within the required time. Which remedy does the seller have?

Accepted Answer

Under the contract, if the buyer fails to deliver earnest money on time, the seller may terminate or exercise default remedies by notice before the buyer delivers. Once the money is delivered, that right ends.

Question 20

A single-family home rents for $2,100 per month. Comparable homes sell at an ANNUAL gross rent multiplier of 12. What is the estimated value?

Accepted Answer

Annual rent = $2,100 x 12 = $25,200; value = $25,200 x 12 = $302,400.

Question 21

Which statement must appear in conspicuous language in a buyer agreement required under §1101.563?

Accepted Answer

SB 1968 requires a conspicuous disclosure that broker compensation is not set by law and is fully negotiable.

Question 22

How many hours of qualifying education must a Texas sales agent applicant complete before applying?

Accepted Answer

Applicants need six 30-hour courses, for a total of 180 hours. Ninety hours is roughly the post-license SAE requirement, which is completed later.

Question 23

What happens to a license holder who fails to advise a buyer in writing to have the abstract examined by an attorney or to obtain title insurance?

Accepted Answer

§1101.555 requires the written advice when an offer is signed, and §1101.806(d) bars the license holder from receiving or recovering the commission if the advice is not given.

Question 24

A husband owns a home as his separate property, and the couple lives there as their homestead. Can he sell it without his wife's signature?

Accepted Answer

Family Code §5.001 requires the other spouse's joinder to sell, convey, or encumber the homestead, whether it is separate or community property.

Question 25

A newly licensed sales agent has not found a sponsoring broker. What is the status of the agent's license?

Accepted Answer

A license issued without a sponsor is inactive. The agent may not perform any brokerage act until a broker sponsors the license. There is no grace period.

Texas real estate practice test

1. Which loan is insured by the federal government and allows a low down payment?

2. A religious organization operating housing for non-commercial purposes may give preference to members of its own religion, but it may NOT:

3. Which federal law requires disclosure of the true cost of credit, including APR?

4. Which advertising practice is misleading under TREC rules?

5. At an open house, a buyer begins telling the listing agent the most he could pay. The agent should first:

6. A borrower's monthly payment does not cover the interest due, and the unpaid interest is added to the loan balance. This is:

7. Which Article of the NAR Code of Ethics requires REALTORS not to deny equal professional services or discriminate on protected characteristics?

8. The approach to value most appropriate for an office building or apartment complex is the:

9. A person who dies with a valid will is said to have died:

10. Rights of an owner whose land borders a flowing river are called:

11. On a property condition disclosure form, if a seller does not know the age of the roof, the seller should:

12. To whom does the buyer deliver the earnest money under the TREC resale contract?

13. A buyer purchases a $300,000 home with an 80% loan, pays 1 point on the loan, a $450 appraisal and $1,800 in title charges, and has already deposited $10,000 earnest money. How much must the buyer bring to closing?

14. The buyer delivers the earnest money on time but delivers the option fee 2 days late. What is the effect?

15. A property assessed at $365,000 is taxed at $2.85 per $100 of assessed value. What is the annual tax?

16. In which situation is a license holder NOT required to provide the IABS?

17. A home sells for $400,000 with a 5% total commission. What is the total commission?

18. A property use that legally existed before a new zoning ordinance and is allowed to continue is a:

19. The buyer fails to deliver the earnest money within the required time. Which remedy does the seller have?

20. A single-family home rents for $2,100 per month. Comparable homes sell at an ANNUAL gross rent multiplier of 12. What is the estimated value?

21. Which statement must appear in conspicuous language in a buyer agreement required under §1101.563?

22. How many hours of qualifying education must a Texas sales agent applicant complete before applying?

23. What happens to a license holder who fails to advise a buyer in writing to have the abstract examined by an attorney or to obtain title insurance?

24. A husband owns a home as his separate property, and the couple lives there as their homestead. Can he sell it without his wife's signature?

25. A newly licensed sales agent has not found a sponsoring broker. What is the status of the agent's license?

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