Nebraska Practice Test → Finance

Nebraska Finance
Practice Questions & Answers (2026)

Finance questions on the Nebraska real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The Nebraska 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. Nebraska 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 NE 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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Nebraska Finance — Practice Questions & Answers

146 questions on Finance from the Nebraska real estate question bank. First 10 are free — sign up to unlock all 146.

Q1. A borrower with a conventional loan and less than 20% down payment can request cancellation of PMI when:

A.The loan has been paid for 5 years
B.The loan-to-value ratio reaches 80% based on the original purchase price or appraised value
C.The property is refinanced
D.The borrower's credit score exceeds 750

Explanation

Under the Homeowners Protection Act, borrowers may request PMI cancellation when the LTV ratio reaches 80% of the original purchase price or appraised value at origination, based on a good payment history.

Q2. A USDA Rural Development loan is best described as a loan:

A.Available only to active-duty military personnel
B.For low-to-moderate income borrowers purchasing in eligible rural areas, often with no down payment
C.Backed by the Federal Housing Administration for urban properties
D.Requiring a minimum 10% down payment in all cases

Explanation

USDA Rural Development loans are government-backed mortgages for eligible rural and suburban homebuyers, often offering 100% financing (no down payment) to qualifying borrowers.

Q3. The Real Estate Settlement Procedures Act (RESPA) prohibits:

A.Lenders from charging origination fees
B.Kickbacks and unearned fees paid between settlement service providers
C.Borrowers from using gift funds for down payments
D.Sellers from contributing to the buyer's closing costs

Explanation

RESPA prohibits kickbacks, referral fees, and unearned fees between settlement service providers (lenders, title companies, attorneys, etc.) that increase the cost of settlement services.

Q4. A buyer purchases a $200,000 home with an FHA loan requiring a 3.5% down payment. What is the down payment amount?

A.$3,500
B.$5,000
C.$7,000
D.$10,000

Explanation

Down payment = $200,000 × 0.035 = $7,000. FHA loans require a minimum 3.5% down payment for borrowers with a credit score of 580 or higher.

Q5. An 'amortized loan' means that each monthly payment:

A.Pays interest only, with the full principal due at the end
B.Is applied to both principal and interest, with the loan fully paid by the end of the term
C.Increases annually based on the consumer price index
D.Covers only taxes and insurance without reducing the loan balance

Explanation

A fully amortized loan has payments structured so that each payment covers both principal and interest, and the loan is completely paid off by the end of the scheduled term.

Q6. Mortgage insurance (PMI) primarily protects:

A.The borrower in case of death or disability
B.The lender in case the borrower defaults
C.The property against physical damage
D.The title company against fraudulent claims

Explanation

Private Mortgage Insurance (PMI) protects the lender — not the borrower — against financial loss if the borrower defaults on the loan. It is required when the borrower's down payment is less than 20%.

Q7. A balloon mortgage is characterized by:

A.Increasing monthly payments over the loan term
B.Relatively low payments for a set period followed by a large lump-sum payment at the end of the term
C.An adjustable rate that changes monthly
D.Payments that include only interest for the full term

Explanation

A balloon mortgage has lower scheduled payments (often based on a longer amortization period), but the remaining balance becomes due in a large 'balloon' payment at the end of a shorter specified term.

Q8. A VA loan benefit is available to:

A.All first-time homebuyers
B.Eligible military veterans, active-duty service members, and surviving spouses
C.Borrowers in rural areas only
D.Low-income borrowers of any background

Explanation

VA home loan benefits are available to eligible veterans, active-duty service members, reservists, National Guard members, and certain surviving spouses. VA loans typically require no down payment.

Q9. A seller who 'carries back' financing means the seller:

A.Cancels the sale and keeps the property
B.Acts as the lender, allowing the buyer to pay the purchase price over time directly to the seller
C.Applies for a new mortgage on behalf of the buyer
D.Returns part of the purchase price to the buyer at closing

Explanation

Seller carryback (seller financing) occurs when the seller acts as the lender, accepting payments directly from the buyer over time rather than receiving the full purchase price at closing from a third-party lender.

Q10. What is the maximum loan limit for an FHA conforming loan in a standard-cost area for a single-family home (approximate 2024 baseline)?

A.$300,000
B.$472,030
C.$548,250
D.$726,200

Explanation

For 2024, the FHA loan limit for a single-family home in a standard-cost area is approximately $472,030 (the 'floor' limit). Higher-cost areas may have higher limits up to the 'ceiling.'

Q11. The Federal Housing Administration (FHA) primarily:

A.Lends money directly to homebuyers
B.Insures approved lenders against loss on qualifying mortgages
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Other Nebraska Exam Topics

Nebraska License LawAgencyContractsProperty OwnershipProperty ValuationFair HousingEscrow & TitleReal Estate MathEnvironmentalLand Use & ZoningProperty Management
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