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GA MLO study materials
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GA MLO: General Mortgage Knowledge

GA MLO · Work through your exam, one topic at a time.

All guide sections

General Mortgage Knowledge

This domain tests product mechanics: how programs differ, how the rate and payment are built and capped, what mortgage insurance does, and how LTV, DTI, and reserves drive eligibility. Expect scenario calculations and program-comparison questions rather than definitions.

Program map

  • Conventional conforming loans are sold to Fannie Mae or Freddie Mac, with the baseline limit set annually by FHFA. Private mortgage insurance is usually required above 80 percent LTV and is cancellable under the Homeowners Protection Act - borrower-requested at 80 percent of original value, automatic termination at 78 percent on the amortization schedule.
  • FHA requires 3.5 percent down at a 580 or better score, charges an upfront mortgage insurance premium of 1.75 percent plus an annual premium, and in most cases the annual premium lasts for the life of the loan.
  • VA offers zero down to eligible veterans with a guaranty instead of monthly mortgage insurance; the funding fee varies with down payment and prior use and is waived for veterans receiving compensation for a service-connected disability.
  • USDA Rural Development offers 100 percent financing subject to rural eligibility and income limits.
  • Jumbo, portfolio, HELOC, construction, and reverse mortgage products fill out the rest.

Adjustable-rate mechanics

Fully indexed rate equals index plus margin. Caps are quoted in order as initial adjustment, periodic adjustment, and lifetime.

Worked example

A 5/1 ARM has a start rate of 6.00 percent, caps of 2/2/6, an index of 4.50 percent, and a margin of 2.75 percent. The fully indexed rate is 7.25 percent. At the first adjustment the rate can rise at most 2 percentage points, so 8.00 percent is the cap, and the loan moves to the lower 7.25 percent figure. The lifetime ceiling is 12.00 percent (6 points over the start rate). The payment is then recalculated on the remaining term at 7.25 percent.

Traps that cost marks

  • Mixing up margin and index; the margin is fixed for the life of the loan, the index moves.
  • Quoting the note rate when the question asks for APR, or forgetting that APR includes fees.
  • Treating MIP and PMI as interchangeable, or assuming FHA mortgage insurance always drops off.
  • Forgetting HOA dues, taxes, and insurance when computing PITI and DTI.
  • Treating a prequalification letter as an underwriting approval.