PITI = Principal, Interest, Taxes, Insurance
Before you read
Test yourself first: 5 questions
Question 1 of 5
The FHA's role in the home loan market is to:
Answer: B. The FHA does not lend money directly; it insures loans made by FHA-approved lenders, reducing lender risk and making financing accessible to more borrowers.
Question 2 of 5
A borrower makes a 20% down payment on a conventional loan. What is the main financing benefit of doing so?
Answer: B. With a 20% down payment the LTV is 80% or less, so lenders generally do not require PMI, lowering the borrower's monthly cost.
Question 3 of 5
A release clause is most commonly associated with which type of financing?
Answer: A. A release clause is typical of a blanket mortgage that covers multiple parcels; it lets the borrower obtain a partial release of the lien on individual lots, usually as each is sold and a portion of the debt is paid.
Question 4 of 5
A borrower is refinancing the mortgage on her primary residence. Under the Truth in Lending Act, what right does she have after signing the loan documents?
Answer: A. TILA grants a 3-business-day right of rescission on refinances and home equity loans secured by the borrower's principal residence (this does not apply to a purchase loan).
Question 5 of 5
What is a 'buydown' in mortgage financing?
Answer: B. A buydown involves paying additional funds at closing (often by the seller or builder) to reduce the borrower's interest rate, either temporarily (e.g., 2-1 buydown) or permanently.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- LTV = loan ÷ value (>80% usually needs PMI)
- PITI = Principal, Interest, Taxes, Insurance
- 1 point = 1% of the loan (buys down the rate)
- FHA insures · VA guarantees · Conventional = neither
- ARM = rate adjusts to an index; fixed = constant
- Amortized = paid to $0 by term end; balloon = big final pmt
- Reg Z (TILA) discloses APR; RESPA bans kickbacks
Financing — Quick Glossary: FAQs
Is Financing — Quick Glossary on the real estate exam?
Yes. Financing & Lending is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
