Real Estate Formulas for Percentages, Interest, and Mortgages

The daily job of a real estate licensee involves calculating commissions, rates of return, simple and compound interest, down payments, loan-to-value, and many more. To ace your Real Estate Test, you’ll need to know how to calculate percentages, interest, and mortgages, and here at Union Test Prep, we have a formula chart with the essential information you need. Feel free to use it when studying, and also check out our other resources for the Real Estate Test:

FREE Study Guide, Flashcards, and Practice Questions

Also, be sure to look at our formula charts for the Real Estate Areas of:

Tax and Credit



Percentages, Interest, and Mortgages Formulas

Category Formula Symbols Comment
Percentages \(a \cdot b\% =a \cdot \frac{b}{100}\) a = any real number
b% = any percent
Remember to simplify if possible.
Percentages \(\% = \frac{\vert b-a \vert }{b} \cdot 100= \frac{c}{b} \cdot 100\) % = % increase or decrease
a = new value
b = original value
c = amount of change
Percentages \(P = T \cdot R\) P = Part
T = Total
R = Rate
Percentage of Depreciation
Percentages \(C = SP \cdot R\) C = Commission
SP = Selling Price
R = Rate
Percentages \(RR = \frac{Ic}{Iv}\) RR = Rate of Return
Ic = Income
Iv = Investment
Rate of Return
Interest \(I = P \cdot R \cdot T\) I = Simple Interest
P = Principal
R = Rate
T = Time
Simple Interest
Interest \(AI = P \cdot R\)
\(QI = AI \div 4\)
\(MI = AI \div 12\)
\(DI = AI \div 365\)
AI = Annual Interest
P = Principal
R = Rate
QI = Quarterly Interest
MI = Monthly Interest
DI = Daily Interest
Interest \(CI = P \cdot i\) CI = Compound Interest
P = Principal
i = interest rate divided by
conversion periods per year
Interest \(S = P(1 + i)^n\) S = Sum = Principal+Compound Interest
P = Principal
i = interest rate divided by
conversion periods per year
n = number of conversion periods in the term
Mortgages \(DP=SP \cdot \%DPR\) DP = Down Payment
SP = Selling Price
%DPR = Down Payment Percent Required
Down Payment
Mortgages \(LTV = \frac {LA}{PV}\) LTV = Loan to Value Ratio
LA = Loan Amount
PV = Property Value
Mortgages \(MLA = PV \cdot LTV\) MLA = Maximum Loan Amount
PV = Property Value
LTV = Loan to Value Ratio
Mortgages \(RDP=PP-MLA\) RDP = Required Down Payment
PP = Purchase Price
MLA = Maximum Loan Amount
Mortgages \(MIP=LA \cdot PR\) MIP = Mortgage Insurance Premium
LA = Loan Amount
PR = Premium Rate
Mortgage Insurance Premium
Mortgages \(LCF=PLA \cdot 1\%\)
\(LOF=LA \cdot 1\%\)
LCF = Loan Commitment Fee
PLA = Promised Loan Amount
LOF = Loan Origination Fee
LA = Loan Amount
Mortgages \(LD = LA \cdot PC\) LD = Loan Discount
LA = Loan Amount
PC = Points Charged
Loan Discount Points
Mortgages \(LPTI= \frac{LP}{MI}\)

\(DTI= \frac{TMD}{MI}\)
LPTI = Loan Payment to Income Ratio
LP = Loan Payment
MI = Monthly Income
DTI = Debt to Income Ratio
TMD = Total Monthly Debt
Income Ratios
Mortgages \(MALP = (\frac{LA}{\$1000}) \cdot LF\) MALP = Monthly Amortized Loan Payment
LA = Loan Amount
LF = Loan Factor (per $1000 of loan amounts)
Amortized Loan Payment
Mortgages \(TMLP = MALP + \frac{1}{12} PT + \frac{1}{12} HI\) TMLP = Total Monthly Loan Payment
PT = Property Taxes
HI = Homeowners Insurance
PITI Payments

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