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 guides, flashcards, and practice questions.

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

• Tax and Credit

• Depreciation

• Measurement

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	Commission
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	Loan-To-Value
Mortgages	\(MLA = PV \cdot LTV\)	MLA = Maximum Loan Amount PV = Property Value LTV = Loan to Value Ratio	Loan-To-Value
Mortgages	\(RDP=PP-MLA\)	RDP = Required Down Payment PP = Purchase Price MLA = Maximum Loan Amount	Loan-To-Value
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	Fees
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