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    Florida Residential Mortgages Practice Questions and Answers

    Residential Mortgages accounts for 9 percent of the Florida sales associate exam, or about 9 of 100 questions. Expect scenarios on loan instruments, Florida lien theory, mortgage clauses, government-backed and conventional loans, assumptions, buyer qualification, and foreclosure. These ten original questions give you a scored check of the rules and calculations candidates most often mix up, with a primary source after every answer.

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    These questions explain how the Florida real estate sales associate exam tests residential mortgages. They are exam-prep practice, not legal, tax, or professional advice. All questions are original Pass Florida constructions, not reproduced Pearson VUE exam items.
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    Official outline coverage

    What Residential Mortgages can test

    The scored set emphasizes the most error-prone rules. Use this map to make sure the smaller subtopics are in your review plan too.

    • Promissory notes, mortgages, and Florida lien theory
    • Mortgage clauses and borrower protections
    • FHA, VA, and conventional loan programs
    • Fixed-rate and adjustable-rate mortgages
    • PMI, mortgage insurance premiums, and funding fees
    • Assumption, subject-to purchases, and seller financing
    • Buyer qualification and finance calculations
    • Judicial foreclosure and deficiency judgments

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    Residential Mortgages Practice Questions

    10 scenario-based questions on residential mortgages, scored, each with a full explanation after you answer. Every question is also written out below if you would rather study at your own pace.

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    How Residential Mortgages is testedRead the strategy behind this topic

    Mortgage questions become manageable when you separate four layers. The note is the evidence of debt. The mortgage creates the lien that secures it. FHA, VA, and conventional describe the loan program. PMI, rate caps, points, and funding fees are program features or costs.

    Next, identify who carries the risk. FHA insures approved lenders against qualifying losses. VA guarantees part of an eligible borrower's loan. Conventional financing has no federal insurance or guaranty, so a lender commonly requires private mortgage insurance when the initial loan-to-value ratio exceeds 80 percent.

    Florida adds its own layer. A mortgage is a lien rather than a conveyance of title, foreclosure is judicial, and any deficiency award is within the court's discretion. The final questions cover the clauses, calculations, and assumption language that connect those rules to an exam scenario.

    Study mode · Every question explainedAll 10 questions, correct answers, exam traps and sources

    Read each question at your own pace, then reveal the correct answer, the reasoning, and the trap that catches most candidates.

    1. 1. A borrower signs both a promissory note and a mortgage to buy a home. Which instrument creates the borrower's obligation to repay the debt?

      • A.The mortgage, because it is recorded in the public record
      • B.The promissory note, which is the borrower's written promise to repay
      • C.The deed, because it transfers ownership
      • D.The satisfaction, which proves the loan was made
      Show answer and explanation

      Correct answer: B. The promissory note, which is the borrower's written promise to repay

      Why B is correct: The promissory note is the instrument that creates the debt. It is the borrower's written promise to repay on stated terms. The mortgage is the security instrument that pledges the property as collateral and creates the lien.

      Trap: The mortgage creates the lien, not the debt. A debt can exist without a mortgage, but a mortgage cannot exist without a debt.

      Source: F.S. Chapter 697, mortgages

    2. 2. In Florida, after a borrower signs a mortgage, who holds title to the property and how does the lender enforce its interest if the borrower defaults?

      • A.The lender holds title and may take the property without going to court
      • B.A trustee holds title and may sell the property without a court
      • C.The borrower holds title and the lender holds a lien enforced through judicial foreclosure
      • D.Title is split equally between borrower and lender until the loan is paid
      Show answer and explanation

      Correct answer: C. The borrower holds title and the lender holds a lien enforced through judicial foreclosure

      Why C is correct: Florida is a lien theory state. The borrower keeps legal and equitable title, and the lender holds only a lien as security. To take the property after default, the lender must go through the courts, which is judicial foreclosure.

      Trap: In a lien theory state the borrower, not the lender, holds title. Florida does not use nonjudicial or trustee foreclosure for mortgages.

      Source: F.S. Chapter 697; F.S. Chapter 702

    3. 3. A first-time buyer has limited savings and a 620 credit score. She needs a loan that allows a low down payment of 3.5 percent but requires mortgage insurance premiums. Which loan program fits?

      • A.A VA loan
      • B.A conventional loan with no mortgage insurance
      • C.An FHA loan
      • D.A loan with no insurance of any kind
      Show answer and explanation

      Correct answer: C. An FHA loan

      Why C is correct: An FHA loan is insured by the Federal Housing Administration, allows a down payment as low as 3.5 percent for borrowers with qualifying credit, and requires mortgage insurance premiums, including an upfront premium and an annual premium.

      Trap: FHA is insured, not guaranteed. VA loans are guaranteed and target veterans, which does not fit this buyer.

      Source: FHA program, U.S. Department of Housing and Urban Development

    4. 4. An eligible veteran wants to buy and occupy a home with no down payment and no monthly mortgage insurance. Which program is designed for this borrower?

      • A.FHA, because it requires only 3.5 percent down
      • B.A conventional loan at 80 percent loan-to-value
      • C.A VA-backed loan, which generally uses a one-time funding fee instead of monthly mortgage insurance
      • D.A subprime loan
      Show answer and explanation

      Correct answer: C. A VA-backed loan, which generally uses a one-time funding fee instead of monthly mortgage insurance

      Why C is correct: The VA home-loan benefit can support a no-down-payment purchase and does not require monthly mortgage insurance. Most borrowers pay a one-time VA funding fee that may be financed, but federal law exempts qualifying borrowers, including many veterans receiving compensation for a service-connected disability.

      Trap: Do not turn the usual funding fee into an absolute rule. VA lists several funding-fee exemptions.

      Source: VA home loan program, U.S. Department of Veterans Affairs

    5. 5. For many conventional loans on a principal residence, which pair correctly states the common initial PMI threshold and the federal automatic-termination point when the borrower is current?

      • A.Required above 80 percent LTV; automatic termination at 78 percent
      • B.Required above 90 percent LTV; automatic termination at 80 percent
      • C.Required on every conventional loan for the life of the loan
      • D.Required above 78 percent LTV; automatic termination at 75 percent
      Show answer and explanation

      Correct answer: A. Required above 80 percent LTV; automatic termination at 78 percent

      Why A is correct: A conventional lender commonly requires PMI when the initial loan-to-value ratio is above 80 percent. Under the Homeowners Protection Act, a borrower may request cancellation when the scheduled balance reaches 80 percent of original value and the statutory conditions are met. Automatic termination generally occurs at the scheduled 78 percent point if the borrower is current.

      Trap: Keep request and automatic termination separate: 80 percent is the request point, while 78 percent is the general automatic point.

      Source: Homeowners Protection Act

    6. 6. On an adjustable-rate mortgage, the interest rate equals an index plus a margin. Which statement describes these two parts correctly?

      • A.The index is the lender's fixed markup and the margin moves with the market
      • B.The index moves with the market and the margin is the lender's fixed markup
      • C.Both the index and the margin are set by the borrower
      • D.Rate caps do not apply to adjustable-rate mortgages
      Show answer and explanation

      Correct answer: B. The index moves with the market and the margin is the lender's fixed markup

      Why B is correct: The index is a market benchmark the lender does not control, so it moves up and down with the market. The margin is the lender's fixed markup added to the index. Rate caps limit how much the rate can rise per adjustment period and over the life of the loan.

      Trap: The borrower controls neither number. The index is the market piece; the margin is the lender's fixed add-on.

      Source: Truth in Lending Act, adjustable-rate disclosures

    7. 7. A borrower pays 2 discount points on a $300,000 loan to lower the interest rate. What is the cost, and what is the effect?

      • A.$600, and it raises the interest rate
      • B.$6,000, and it lowers the interest rate
      • C.$3,000, and it has no effect on the rate
      • D.$6,000, and it is only a lender processing fee
      Show answer and explanation

      Correct answer: B. $6,000, and it lowers the interest rate

      Why B is correct: One discount point equals one percent of the loan amount. Two points on a $300,000 loan is 2 percent, or $6,000. Discount points are prepaid interest that buy down the interest rate, so they lower it.

      Trap: Do not confuse discount points, which lower the rate, with origination points, which are a fee for processing the loan and do not lower the rate.

      Source: Truth in Lending Act, finance charge disclosures

    8. 8. A mortgage contains a clause that lets the lender demand the entire unpaid balance immediately if the borrower sells or transfers the property without first paying off the loan. This clause is a

      • A.prepayment penalty clause
      • B.subordination clause
      • C.due-on-sale (alienation) clause
      • D.defeasance clause
      Show answer and explanation

      Correct answer: C. due-on-sale (alienation) clause

      Why C is correct: A due-on-sale clause, also called an alienation clause, lets the lender call the full balance due if the borrower transfers the property without paying off the loan. It is a specific trigger of the lender's broader acceleration power, aimed at preventing an unapproved assumption.

      Trap: An acceleration clause is the general power to demand the full balance. A due-on-sale clause is the specific version triggered by transfer of the property.

      Source: Mortgage clauses, F.S. Chapter 697

    9. 9. A Florida judicial foreclosure sale brings less than the balance the borrower still owes on the loan. The lender may

      • A.not pursue the borrower further, because the property fully satisfies the debt
      • B.seek a deficiency judgment against the borrower for the remaining balance
      • C.garnish the borrower's wages immediately without any further court action
      • D.repossess other property the borrower owns without a court order
      Show answer and explanation

      Correct answer: B. seek a deficiency judgment against the borrower for the remaining balance

      Why B is correct: A sale shortfall is a deficiency. Florida permits the lender to seek a deficiency decree, but the award is within the court's sound discretion. For owner-occupied residential property, the amount may not exceed the judgment amount, or outstanding debt in a short sale, minus the property's fair market value on the sale date.

      Trap: A short sale price does not automatically become the deficiency amount, and the lender cannot bypass the court to seize unrelated assets.

      Source: F.S. 702.06, deficiency decree

    10. 10. A buyer takes title to a home 'subject to' the seller's existing mortgage but does not assume the debt. Which statement is correct?

      • A.The buyer becomes personally liable for the note and the seller is automatically released
      • B.The buyer does not become personally liable for the existing debt, but the lender can still foreclose the property after default
      • C.The mortgage is extinguished automatically when the deed is delivered
      • D.The lender must accept the buyer as a substitute borrower
      Show answer and explanation

      Correct answer: B. The buyer does not become personally liable for the existing debt, but the lender can still foreclose the property after default

      Why B is correct: In a subject-to purchase, the existing loan remains in the seller's name and the buyer does not promise the lender to pay it. The mortgage lien remains on the property, so a default can still lead to foreclosure. By contrast, an assumption makes the buyer personally responsible for the assumed obligation, subject to the loan terms and lender requirements.

      Trap: Title and personal liability are separate. Taking title subject to a lien does not make the buyer the note's borrower, but it does leave the property exposed to foreclosure.

      Source: Florida mortgage principles; contract and loan terms control

    FAQ

    Frequently asked questions

    How many mortgage questions are on the Florida real estate exam?+

    The official Florida sales associate exam outline assigns 9 questions to Residential Mortgages. The tested scope includes mortgage theories, loan instruments and clauses, loan programs, purchasing mortgaged property, buyer qualification, and finance math.

    Are these real Florida real estate exam questions?+

    No. These are original Pass Florida questions built from the official exam outline. They are not copied or recalled Pearson VUE items. This mortgage set was checked against 2026 Florida law and current HUD, VA, and CFPB guidance on August 31, 2026.

    Is Florida a lien theory or title theory state?+

    Florida is a lien theory state. The borrower keeps title to the property and the lender holds only a lien. Because the lender does not hold title, foreclosure must go through the courts, which is judicial foreclosure.

    What is the difference between the note and the mortgage?+

    The promissory note creates the debt and is the borrower's promise to repay. The mortgage is the security instrument that pledges the property as collateral and creates the lien. The note controls, because a debt can exist without a mortgage but not the reverse.

    What is the difference between FHA, VA, and conventional loans?+

    An FHA loan is insured by the Federal Housing Administration and can allow a low down payment with mortgage insurance premiums. A VA-backed loan serves eligible borrowers, can allow no down payment, and has no monthly mortgage insurance. A conventional loan is not government-insured or guaranteed and commonly requires PMI above 80 percent initial loan-to-value.

    When is private mortgage insurance required in Florida?+

    A conventional lender commonly requires PMI when the borrower puts down less than 20 percent. For many covered principal-residence loans, the borrower may request cancellation at the scheduled 80 percent point if statutory conditions are met, and the servicer generally must terminate PMI automatically at the scheduled 78 percent point when the borrower is current.

    Does every VA borrower pay a funding fee?+

    No. Most VA-backed or VA direct borrowers pay a one-time funding fee, but VA exempts qualifying borrowers. Examples include many veterans receiving or eligible for service-connected disability compensation, certain surviving spouses receiving DIC, and eligible active-duty Purple Heart recipients.

    What is the difference between assuming a mortgage and buying subject to it?+

    With an assumption, the buyer agrees to become personally responsible for the existing loan, subject to its terms and any lender approval. In a subject-to purchase, the buyer takes title with the lien still attached but does not personally assume the note. The original borrower remains liable unless the lender grants a release, and default can still lead to foreclosure.

    Can a Florida lender collect a mortgage deficiency after foreclosure?+

    A lender may seek a deficiency decree when the foreclosure proceeds do not satisfy the debt, but the award is within the court's discretion. For owner-occupied residential property, F.S. 702.06 caps the deficiency using the property's fair market value on the sale date.