Washington Finance
Practice Questions & Answers (2026)
Finance questions on the Washington real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The Washington Department of Licensing 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. Washington 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 WA 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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Washington Finance — Practice Questions & Answers
131 questions on Finance from the Washington real estate question bank. First 10 are free — sign up to unlock all 131.
Q1. Washington State does NOT have which of the following taxes?
Explanation
Washington State does not have a personal state income tax, making it one of a few states without this tax. It does have a Real Estate Excise Tax, property tax, and B&O tax.
Q2. Washington's Real Estate Excise Tax (REET) is paid by:
Explanation
Washington's Real Estate Excise Tax (REET) is a tax on the sale of real property, customarily paid by the seller at closing based on the selling price.
Q3. A Washington buyer borrows $400,000 at 7% annual interest. What is the interest accrued in the first month?
Explanation
Monthly interest = Principal × Annual Rate ÷ 12 = $400,000 × 7% ÷ 12 = $400,000 × 0.005833 = $2,333 (rounded). First month's interest is $2,333.
Q4. Title insurance is especially important in Washington because the state uses a:
Explanation
Washington uses a deed of trust system (rather than traditional mortgages) for real property loans. Title insurance is widely used to protect both lenders and owners from title defects.
Q5. 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 specified index (e.g., SOFR, CMT). The initial rate may be lower than a fixed rate, but it can increase over time.
Q6. Washington's Real Estate Excise Tax (REET) uses a tiered rate structure. For sales above $3 million, the rate is:
Explanation
Washington's tiered REET rates as of 2023 top out at 3.00% on the portion of the sale price exceeding $3 million, making Washington's excise tax one of the higher ones for luxury residential sales.
Q7. A Washington buyer obtains a conventional loan with a 20% down payment on a $550,000 home. What is the loan-to-value (LTV) ratio?
Explanation
LTV = Loan Amount ÷ Purchase Price. Down payment = 20% × $550,000 = $110,000. Loan = $440,000. LTV = $440,000 ÷ $550,000 = 80%.
Q8. Under the federal Truth in Lending Act (TILA), the Annual Percentage Rate (APR) disclosed to a Washington borrower:
Explanation
The APR, required under TILA, reflects the true cost of borrowing by incorporating the interest rate plus certain fees (points, origination fees, etc.) into a single annualized rate, allowing consumers to compare loan offers.
Q9. Washington borrowers using FHA loans must pay:
Explanation
FHA loans require both an upfront mortgage insurance premium (UFMIP) and annual mortgage insurance premiums (MIP) regardless of the down payment amount, protecting the lender against default.
Q10. A Washington seller agrees to pay two discount points to buy down a buyer's interest rate. If the loan amount is $380,000, what is the cost of the points?
Explanation
One discount point equals 1% of the loan amount. Two points = 2% × $380,000 = $7,600.
Q11. Which type of loan program is specifically designed to help Washington veterans purchase homes with no down payment?
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