NMLS SAFE MLO Practice Questions (2026) — Free Sample Questions with Answers

Answer: A

1. 1. LE total for the 10% category: $200 + $1,000 + $800 = $2,000.
2. 2. Allowed limit: $2,000 × 1.10 = $2,200.
3. 3. CD total: $260 + $1,140 + $870 = $2,270.
4. 4. Cure: $2,270 − $2,200 = $70.

$70: Correct. 12 CFR 1026.19(e)(3)(ii): these charges are tested in aggregate against the LE total plus 10%. $2,270 − $2,200 = $70, refunded within 60 days after consummation.

$80: Tests each fee separately against its own 110% limit: recording $260 − $220 = $40, title policy $1,140 − $1,100 = $40, settlement fee $870 under $880 = $0, total $80. The 10% test applies to the category total.

$200: This is the 10% allowance itself ($2,000 × 10%), not the amount by which the CD exceeds it.

$270: This refunds the entire increase and ignores the 10% the creditor is allowed.

Recording fees and shoppable services chosen from the written list share one aggregate 10% tolerance; only the excess over 110% is refunded.

Answer: D

the APR on the regular fixed-rate loan increases by more than 1/8 of a percentage point: An APR that becomes inaccurate beyond tolerance requires a new 3-business-day wait, 1026.19(f)(2)(ii)(A).

the loan product changes from a 30-year fixed rate to a 7/1 adjustable-rate loan: A change in loan product requires a new 3-business-day wait, 1026.19(f)(2)(ii)(B).

the creditor adds a prepayment penalty that was not in the original loan terms: Adding a prepayment penalty requires a new 3-business-day wait, 1026.19(f)(2)(ii)(C).

the seller agrees at the walk-through to give a $1,500 credit that lowers cash to close: Correct. 12 CFR 1026.19(f)(2)(i): most changes, such as a seller credit reducing cash to close, need only a corrected CD at or before consummation, with no new waiting period.

Only three CD changes restart the 3-business-day wait: APR beyond tolerance, a product change, or an added prepayment penalty.

Answer: C

Monday, May 25: This counts calendar days, including the Sunday and the federal holiday, which are excluded.

Tuesday, May 26: This excludes Sunday but counts Memorial Day, a legal public holiday that is not a business day for rescission.

Wednesday, May 27: Correct. 12 CFR 1026.23(a)(3) with 1026.2(a)(6): rescission uses all calendar days except Sundays and legal public holidays. Saturday 5/23 (1), Tuesday 5/26 (2), Wednesday 5/27 (3).

Thursday, May 28: This uses the general business-day definition and skips Saturday; rescission uses the specific definition, which counts Saturdays.

Rescission runs 3 business days under the specific definition (Saturdays count; Sundays and federal holidays do not), starting after the last of consummation, the notice and the material disclosures.

Answer: D

Within 3 business days after the creditor receives the application: Three business days after application is when the notice of the right to a copy is due, not the copy itself.

Within 30 days after the creditor receives the completed appraisal: Thirty days is the Regulation B action-taken deadline; the appraisal copy rule has no 30-day window.

At consummation, delivered together with the final Closing Disclosure package: Delivery at consummation is too late unless the applicant waived the timing requirement.

Promptly on completion, or 3 business days before consummation, if earlier: Correct. 12 CFR 1002.14(a)(1): copies of appraisals and other written valuations are due promptly upon completion or three business days before consummation, whichever is earlier.

Give the right-to-copy notice within 3 business days of application and the appraisal itself promptly, no later than 3 business days before consummation.

Answer: B

she may originate for Cedar Point under temporary authority meanwhile: Temporary authority covers a registered MLO moving to a licensed company or a licensed MLO moving to a new state, not a same-state change of employer.

Cedar Point must sponsor her license through NMLS: Correct. A state MLO license is inactive without a sponsoring licensed employer; the new company must sponsor her in NMLS and the regulator must approve it.

she must file a new license application and retake the test: The license is hers; a new application and retesting apply only after 5 years without a license.

she may keep originating under Fairbanks's sponsorship for 30 days: Sponsorship ends when she leaves Fairbanks; there is no 30-day carryover.

When an MLO changes employers, the license must be sponsored by the new licensed company in NMLS before origination resumes.

Answer: D

the note interest rate charged on the principal balance of the loan: Interest is the core component of the finance charge and APR.

discount points the borrower pays at closing to reduce the rate: Points are finance charges and raise the APR.

mortgage insurance premiums the lender requires as a loan condition: Required mortgage insurance premiums are finance charges, 1026.4(b)(5).

the homeowner's insurance premium paid to an insurer the borrower chose: Correct. 12 CFR 1026.4(d)(2): property insurance premiums are excluded from the finance charge when the consumer may choose the insurer and this is disclosed.

APR expresses the finance charge (interest, points, required MI and similar charges) as a yearly rate; optional-insurer property insurance is excluded.

Answer: A

A 15-year fixed-rate mortgage: Correct. A 15-year fixed-rate, fully amortizing loan keeps the same P&I payment and is paid off in 15 years, before she retires.

A 15-year ARM with a 5-year fixed period: The term fits, but the rate and payment can change after year 5.

A 30-year fixed-rate loan paid biweekly: Biweekly payments shorten a 30-year loan only to roughly 24–26 years, well past her retirement.

A 15-year balloon amortized over 30 years: The payments fit, but a large balance comes due at year 15, forcing a payoff or refinance.

Match the term and payment type to the goal: a fixed rate for a level payment, and a term no longer than the payoff horizon.

Answer: A

It can be a General QM; the spread is under the 2.25-point limit: Correct. 12 CFR 1026.43(e)(2)(vi): for a 2026 first lien of $137,958 or more, the APR must be less than 2.25 points over APOR. At 2.0 it passes, as a higher-priced QM with a rebuttable presumption.

It cannot be a QM, because the spread is above the 1.5-point limit: A 1.5-point spread is the HPML threshold; it decides safe harbor versus rebuttable presumption, not QM status.

It can be a QM only if points and fees are no more than 5% of the loan: For a loan of this size, the QM points-and-fees limit is 3%, not 5% (the HOEPA trigger).

It cannot be a QM, because a QM may never be a higher-priced loan: A QM can be higher-priced; it then has a rebuttable presumption of ATR compliance instead of a safe harbor.

General QM: APR under APOR + 2.25 (first lien, 2026 loans of $137,958 or more); at APOR + 1.5 or more, the QM is higher-priced with a rebuttable presumption.

Answer: B

1. 1. Note-rate P&I: 300 × $6.65 = $1,995.
2. 2. Year 1 at 5%: 300 × $5.37 = $1,611; subsidy $384 × 12 = $4,608.
3. 3. Year 2 at 6%: 300 × $6.00 = $1,800; subsidy $195 × 12 = $2,340.
4. 4. Total: $4,608 + $2,340 = $6,948.

$4,608: Counts only year 1 (2 points below the note rate) and leaves out the year 2 subsidy.

$6,948: Correct. Year 1 saves $384 a month and year 2 saves $195 a month; ($384 × 12) + ($195 × 12) = $6,948.

$9,000: Treats the buydown as 2% plus 1% of the loan amount instead of the payment differences.

$13,896: Applies the combined monthly difference ($579) to both years instead of each year's own difference.

A buydown costs the sum of the monthly payment differences from the note-rate payment for each subsidized year.

Answer: C

Monday: Counts 3 calendar days (Saturday, Sunday, Monday); Sundays do not count for rescission.

Tuesday: Tuesday is the last day of the rescission period; funds cannot be disbursed until it expires at midnight.

Wednesday: Correct. Rescission days are all calendar days except Sundays and federal holidays: Saturday, Monday and Tuesday. The right expires at midnight Tuesday, so funds may go out Wednesday.

Thursday: Excludes Saturday by using the general business-day definition; rescission uses the specific definition.

Rescission runs 3 business days (Sundays and federal holidays excluded) after the last of consummation, the notice and the material disclosures; funding follows the next day.

Answer: B

1. 1. Annual income: $31.25 × 40 × 52 = $65,000.
2. 2. Monthly income: $65,000 ÷ 12 = $5,416.67.
3. 3. Monthly obligations: $1,620 + $410 + $95 = $2,125 (utilities are not debts).
4. 4. Back-end DTI: $2,125 ÷ $5,416.67 = 0.392 = 39.2%.

29.9%: This is the front-end (housing) ratio only: $1,620 ÷ $5,416.67.

39.2%: Correct. Monthly income is $5,416.67; housing plus credit obligations total $2,125, and $2,125 ÷ $5,416.67 = 39.2%.

42.5%: Converts pay by multiplying the weekly amount by 4 ($5,000) instead of 52 weeks ÷ 12.

44.8%: Counts utilities, which are living expenses, not credit obligations included in DTI.

Back-end DTI = (housing payment + recurring credit obligations) ÷ gross monthly income; hourly pay converts as rate × hours × 52 ÷ 12.

Answer: C

The seller agrees to pay $1,500 more of the closing costs: Requires a corrected CD at or before consummation, but not a new waiting period.

The APR drops 0.30 point because a lender fee was removed: An APR that is overstated because the finance charge fell is treated as accurate, so no new waiting period applies.

A prepayment penalty is added to the loan terms: Correct. Adding a prepayment penalty is one of the three changes (with an APR that becomes inaccurate and a loan product change) that restart the 3-business-day wait. 12 CFR 1026.19(f)(2)(ii).

The owner's title insurance premium rises by $400: A fee increase calls for a corrected CD before consummation, with tolerance limits, but no new waiting period.

Only an inaccurate APR, a product change or an added prepayment penalty restarts the 3-business-day CD wait; other changes just need a corrected CD at or before consummation.

Answer: C

1. 1. 10% bucket on the LE: $120 + $1,680 = $1,800.
2. 2. Allowed total: $1,800 × 1.10 = $1,980.
3. 3. Bucket at closing: $160 + $1,990 = $2,150.
4. 4. Cure: $2,150 − $1,980 = $170. The off-list survey (unlimited tolerance) is left out.

$40: Treats the list-provider title services as unlimited and refunds only the recording-fee increase; both charges belong in the 10% bucket.

$142: Tests only the title services ($1,990 − $1,848) and leaves the recording fee out of the bucket; recording fees are part of the 10% aggregate.

$170: Correct. The 10% bucket rose from $1,800 to $2,150; the limit is $1,980, so $170 must be refunded no later than 60 days after consummation.

$290: Adds the off-list survey to the bucket; services the borrower chose off the written list have unlimited tolerance.

The 10% test compares the sum of the bucket at closing with 110% of the sum on the LE; only the excess is refunded, within 60 days after consummation.

Answer: B

is permitted, because age may be considered once an applicant is over 62: Age 62 or older may be considered only in the applicant's favor, never to limit credit.

is prohibited, because life expectancy can't be used to limit terms: Correct. A creditor may not use age, or the applicant's life expectancy, to deny or restrict credit terms. 12 CFR 1002.6(b)(2).

is permitted, as long as the MLO documents the reason in the file: Documenting a prohibited basis does not make it lawful.

is prohibited only if the creditor uses a credit scoring system: Backwards: the prohibition applies to judgmental decisions too; scoring systems are the narrow case where age may be a factor.

Age is a prohibited basis; an elderly applicant's life expectancy cannot be used to limit credit.

Answer: D

the loan with the lowest interest rate: Required: the lowest-rate option is one of the three safe-harbor loans.

the loan with the lowest total origination points, fees and discount points: Required: the lowest total dollar amount of points and fees is one of the three.

the lowest-rate loan without risky features such as a balloon or negative amortization: Required: the lowest rate without risky features (negative amortization, prepayment penalty, interest-only, early balloon, demand feature, shared equity) is one of the three.

the loan with the lowest monthly payment: Correct. The lowest monthly payment is not a safe-harbor category; a low payment can come from risky features such as interest-only terms.

Safe-harbor options: lowest rate, lowest rate without risky features, and lowest total points and fees, each from creditors that regularly do business with the MLO.