Real Estate MathIntermediateNorth Carolina Exam

A buyer purchases a home in Chapel Hill for $550,000 with a 20% down payment. How much is the down payment?

Q: A buyer purchases a home in Chapel Hill for $550,000 with a 20% down payment. How much is the down payment?

Down payment = $550,000 x 0.20 = $110,000. To solve this, multiply the relevant values: $550,000 at 20%.. The correct answer is $110,000.. This is a common calculation on the North Carolina real estate exam.

A$55,000 (computed using the wrong base value for the loan calculation)

B$88,000

C$110,000Correct

D$100,000

Why $110,000 Is Correct

Answer C: $110,000

Down payment = $550,000 x 0.20 = $110,000.

Exam Tip: Real Estate Math

Math questions are formula-based. Memorize the key formulas: commission splits, proration, cap rate (NOI ÷ Value), GRM (Price ÷ Gross Rent), and LTV (Loan ÷ Value). Practice converting between annual and monthly figures.

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Key Terms to Know

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.

Loan-to-Value Ratio (LTV)

The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.

Math Concepts

Down Payment

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