California Real Estate Practice Exam

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A property offered for sale for $88,000 has been appraised for a new FHA loan at an appraised value of $87,500. How large a loan can be obtained if the FHA down payment is 3% of the first $25,000 of the appraised value plus 5% of the remainder of $25,000?

$83,625
$84,100
$84,125
$84,338

The correct answer is: $83,625

To determine the maximum loan amount that can be obtained under the FHA guidelines, it’s crucial to understand how the down payment is calculated based on the appraised value. The property has an appraised value of $87,500. The FHA down payment involves calculating 3% of the first $25,000 and 5% of the portion of the appraised value that exceeds $25,000. 1. **Calculate the down payment**: - The first $25,000: \[ 3\% \text{ of } 25,000 = 0.03 \times 25,000 = 750 \] - The remaining amount beyond $25,000 is: \[ 87,500 - 25,000 = 62,500 \] - The next $62,500 is calculated at 5%: \[ 5\% \text{ of } 62,500 = 0.05 \times 62,500 = 3,125 \] 2. **Sum the two down payments**: \[ 750 + 3,125 = 3,875