Idaho Finance
Practice Questions & Answers (2026)
Finance questions on the Idaho real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The Idaho Real Estate Commission tests both the mechanics of real estate financing and the regulatory framework — particularly RESPA, TILA (Truth in Lending), and the TRID rules that govern loan disclosures. Idaho candidates often lose points on financing questions because they understand the concept but miss the specific numerical thresholds or disclosure timing requirements that appear on the ID exam. Pay particular attention to ARM vs. fixed-rate mortgage distinctions, the calculation of LTV ratios, and what information must appear in specific disclosure documents.
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Idaho Finance — Practice Questions & Answers
149 questions on Finance from the Idaho real estate question bank. First 10 are free — sign up to unlock all 149.
Q1. In Idaho, a lien theory state, which legal instrument is commonly used to secure a real estate loan?
Explanation
Idaho is a lien theory state where a mortgage is the primary security instrument. The borrower retains legal title and grants the lender a lien on the property. (Some states use a deed of trust, which involves three parties: borrower, lender, and trustee.)
Q2. The loan-to-value (LTV) ratio is calculated as:
Explanation
LTV ratio = Loan Amount ÷ Appraised Value (or purchase price, whichever is lower). A higher LTV means the borrower has less equity, which typically increases lender risk and may require private mortgage insurance (PMI).
Q3. RESPA (Real Estate Settlement Procedures Act) requires lenders to provide borrowers with a Loan Estimate within how many days of receiving a loan application?
Explanation
RESPA requires lenders to provide borrowers with a Loan Estimate within 3 business days of receiving a completed loan application. The Loan Estimate discloses estimated costs and terms of the loan.
Q4. A VA loan is available to eligible borrowers and is guaranteed by:
Explanation
VA loans are guaranteed by the U.S. Department of Veterans Affairs, allowing eligible veterans, active-duty service members, and surviving spouses to obtain home loans with favorable terms, often with no down payment required.
Q5. When a buyer assumes an existing mortgage, they:
Explanation
When a buyer assumes a mortgage, they take over the payment obligations. However, the original seller may remain secondarily liable unless the lender specifically releases them through a novation agreement.
Q6. What is the purpose of private mortgage insurance (PMI)?
Explanation
PMI protects the lender (not the borrower) against loss if a borrower defaults on a conventional loan with less than 20% down payment. PMI allows lenders to offer loans with higher LTV ratios while managing their risk.
Q7. The Truth-in-Lending Act (TILA) requires lenders to disclose which key information to borrowers?
Explanation
TILA (Regulation Z) requires lenders to disclose the annual percentage rate (APR), finance charges, total amount financed, and total payments. The APR includes the interest rate plus other loan costs, giving borrowers a true cost comparison.
Q8. An adjustable-rate mortgage (ARM) typically features:
Explanation
An ARM has an interest rate that adjusts periodically (e.g., annually) based on a market index such as the SOFR or Treasury rate, plus a margin. ARMs often have an initial fixed-rate period before adjustments begin.
Q9. A mortgage that requires the borrower to pay only interest during the loan term with the full principal due at maturity is called a:
Explanation
A straight loan (also called a term loan or interest-only loan) requires the borrower to pay interest only during the loan term, with the entire principal balance due in a lump sum (balloon payment) at maturity.
Q10. The Federal Reserve's primary tool for influencing mortgage interest rates is:
Explanation
The Federal Reserve influences interest rates primarily by adjusting the federal funds rate — the rate banks charge each other for overnight lending. Changes to this rate ripple through the economy, affecting mortgage rates.
Q11. Which loan type is insured by the Federal Housing Administration and allows for a lower down payment?
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