New Mexico Finance
Practice Questions & Answers (2026)
Finance questions on the New Mexico real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The New Mexico 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. New Mexico 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 NM 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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New Mexico Finance — Practice Questions & Answers
149 questions on Finance from the New Mexico real estate question bank. First 10 are free — sign up to unlock all 149.
Q1. A buyer in New Mexico takes out a mortgage loan. The document that pledges the property as collateral for the loan is called:
Explanation
A deed of trust (or mortgage) pledges the property as collateral for the loan. The promissory note is the borrower's promise to repay the debt.
Q2. What is the loan-to-value (LTV) ratio on a $200,000 home with a $160,000 mortgage?
Explanation
LTV = Loan Amount / Property Value = $160,000 / $200,000 = 0.80 or 80%.
Q3. Under RESPA (Real Estate Settlement Procedures Act), a lender must provide a Loan Estimate to the borrower within:
Explanation
RESPA requires lenders to provide the Loan Estimate (LE) to borrowers within 3 business days of receiving a loan application.
Q4. Which type of mortgage loan has an interest rate that can change periodically based on a specified index?
Explanation
An adjustable-rate mortgage (ARM) has an interest rate that adjusts periodically based on a specified market index, which can cause monthly payments to increase or decrease.
Q5. A borrower has a gross monthly income of $6,000. Using a 28% front-end ratio, what is the maximum monthly housing payment the lender will typically approve?
Explanation
Maximum housing payment = $6,000 x 0.28 = $1,680 per month. The front-end ratio limits the housing payment as a percentage of gross monthly income.
Q6. A conventional loan that exceeds the conforming loan limit set by the FHFA is called a:
Explanation
A jumbo loan is a conventional mortgage that exceeds the conforming loan limits set by the FHFA, making it ineligible for purchase by Fannie Mae or Freddie Mac.
Q7. Which government agency insures FHA loans?
Explanation
FHA loans are insured by the Federal Housing Administration, which allows lenders to offer loans with lower down payments and more flexible qualification standards.
Q8. What is the minimum down payment required for an FHA loan for a borrower with a credit score of 580 or higher?
Explanation
Borrowers with a credit score of 580 or higher may qualify for an FHA loan with a minimum 3.5% down payment.
Q9. The Truth in Lending Act (TILA) requires lenders to disclose the:
Explanation
TILA requires lenders to clearly disclose the annual percentage rate (APR) and total finance charges so borrowers can compare loan costs.
Q10. A buyer obtains a $250,000 mortgage at 6% annual interest. What is the first month's interest payment?
Explanation
Monthly interest = $250,000 x 6% / 12 = $250,000 x 0.005 = $1,250.
Q11. Which type of loan requires no down payment and is available to eligible veterans?
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