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Finance & Math

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FINANCE & MATH — CHEAT SHEET

Texas RE Salesperson Exam

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COMMISSION CALCULATIONS

Basic Formula

`` Commission = Sales Price × Commission Rate `

Net to Seller (Reverse)

` Sale Price = Desired Net ÷ (1 − Commission Rate) `

Commission Split Process

  • Calculate total commission ($ amount)
  • Split to listing broker | split to selling broker
  • Split each broker's share to their agent(s)
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    PRORATION (365-Day Method)

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    Key Rule: Closing day belongs to the BUYER (seller pays through day before)

    Tax Proration Example

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    LOAN MATH

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    DTI & QUALIFICATION

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    Formula: DTI = Monthly debt ÷ Gross monthly income

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    TEXAS HOMESTEAD MATH

    Home Equity Loan Maximum

    ` Max HEL = (Home Value × 80%) − Existing Liens `

    Example: Home worth $300K; $200K first mortgage.

    • 80% max debt: $300K × 0.80 = $240K
    • Max HEL: $240K − $200K = $40K

    Homestead Sizes

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    KEY FORMULAS — ONE-PAGE QUICK REF

    ` Commission: Sales Price × Rate Net Sale: Desired Net ÷ (1 − Rate)

    Proration: (Annual ÷ 365) × # Days [Closing day = Buyer's day]

    LTV: Loan ÷ Appraised Value Down: Price × % Loan: Price − Down

    Interest: Loan × Rate ÷ 12 Payment: (Loan ÷ 1,000) × Factor

    DTI: Monthly Debt ÷ Gross Income HEL Max: (Value × 80%) − Existing Liens ``

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    EASILY-CONFUSED PAIRS

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    QFormula/Rule
    Total commission on $400K @ 6%?$400K × 0.06 = $24,000
    Seller nets $280K after 6% fee?$280K ÷ 0.94 = $297,872
    StepFormula
    Daily rateAnnual amount ÷ 365
    Days owedCount actual calendar days
    Amount proratedDaily rate × # days
    ElementCalculation
    Annual tax$4,380
    ClosingApril 15
    Seller's days (Jan 1–Apr 14)31+28+31+14 = 104
    Daily rate$4,380 ÷ 365 = $12/day
    Seller owes (buyer credit)104 × $12 = $1,248
    TermFormulaExample
    LTVLoan ÷ Value$200K ÷ $250K = 80%
    Down paymentPrice × % down$300K × 20% = $60K
    Loan amountPrice − Down$300K − $60K = $240K
    First month interestLoan × Rate ÷ 12$200K × 6% ÷ 12 = $1,000
    Monthly P&I (est.)(Loan ÷ 1,000) × Factor($200K ÷ 1K) × $6.65 = $1,330
    Loan TypeFront-End (PITI)Back-End (Total Debt)
    Conventional≤ 28%≤ 36–45%
    FHA≤ 31%≤ 43%
    VANo limit≤ 41%
    TypeLimit
    Urban10 acres
    Rural (family)200 acres
    Rural (single adult)100 acres
    PairDifference
    LTV vs. DTILTV = property leverage; DTI = borrower debt capacity
    PMI vs. MIPPMI = conventional loans; MIP = FHA loans
    Closing day seller vs. buyerDay of closing = BUYER's day (seller prorated through day before)
    365 vs. 360 daysTexas = 365-day method (actual calendar days)
    Home equity vs. refinanceHEL = new 2nd lien; Refinance = replaces existing 1st
    Non-judicial (TX) vs. judicial foreclosureTX = power of sale, fast (21-day notice); Judicial = court, slow
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    EXAM HINTS

    ✓ Always show work for multi-step problems ✓ Round to nearest cent (unless directed otherwise) ✓ Check your answer — does it make sense? ✓ Texas = 365 days, non-judicial foreclosure, deed of trust ✓ Commission splits: Go step-by-step, not all at once ✓ Prorations: Identify who owes whom; use buyer credit = seller debit

    Aligned to the Texas TREC salesperson exam content outline.

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