Indiana Finance
Practice Questions & Answers (2026)
Finance questions on the Indiana real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The Indiana Professional Licensing Agency 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. Indiana 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 IN 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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Indiana Finance — Practice Questions & Answers
149 questions on Finance from the Indiana real estate question bank. First 10 are free — sign up to unlock all 149.
Q1. A wraparound mortgage is BEST described as:
Explanation
A wraparound mortgage is a form of seller financing in which the seller takes back a new mortgage from the buyer that includes (wraps around) the existing underlying mortgage. The seller continues to make payments on the original loan from the buyer's payments.
Q2. Regulation Z (Truth in Lending) requires disclosure of the APR for all of the following EXCEPT:
Explanation
Regulation Z (TILA) applies to consumer credit transactions, not business loans. Business loans over $25,000 are generally exempt from TILA disclosure requirements, including the APR requirement.
Q3. A USDA Rural Development loan is designed to assist buyers in:
Explanation
USDA Rural Development loans (Section 502 Guaranteed Loan Program) are designed to help low-to-moderate income buyers purchase homes in eligible rural and suburban areas, often with no down payment required.
Q4. The secondary mortgage market primarily:
Explanation
The secondary mortgage market (dominated by Fannie Mae and Freddie Mac) buys mortgage loans from primary lenders (banks, mortgage companies), packages them as mortgage-backed securities, and sells them to investors. This provides lenders with capital to make new loans.
Q5. A reverse mortgage allows homeowners aged 62 or older to:
Explanation
A reverse mortgage (most commonly the FHA Home Equity Conversion Mortgage, or HECM) allows homeowners 62+ to borrow against their home equity with no required monthly mortgage payments. The loan is repaid when the borrower moves, sells, or passes away.
Q6. What is the purpose of the Truth in Lending Act (TILA)?
Explanation
TILA requires lenders to disclose credit costs clearly, including the Annual Percentage Rate (APR), so borrowers can compare loan offers accurately.
Q7. A conventional loan is best defined as a mortgage:
Explanation
A conventional loan is one that is not insured or guaranteed by a federal government agency such as FHA, VA, or USDA.
Q8. Private Mortgage Insurance (PMI) is typically required when the down payment is less than:
Explanation
Lenders typically require PMI when the buyer's down payment is less than 20% of the purchase price, protecting the lender against default.
Q9. An adjustable-rate mortgage (ARM) differs from a fixed-rate mortgage in that:
Explanation
An ARM has an interest rate that adjusts periodically based on a benchmark index, which means monthly payments can increase or decrease over the life of the loan.
Q10. The loan-to-value (LTV) ratio is calculated as:
Explanation
LTV is calculated by dividing the loan amount by the appraised value of the property, expressed as a percentage. A lower LTV means less risk for the lender.
Q11. An FHA loan requires a minimum down payment of:
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