Texas Real Estate Exam Math: Every Formula (2026)

The Texas real estate exam contains roughly 10–15 math questions across both sections — enough to shift your score by 6–10 percentage points. You cannot bring your own calculator; Pearson VUE provides a basic on-screen calculator in the testing software that handles arithmetic and percentages. Most of the math appears on the 80-question National section: commission splits, loan-to-value ratios, gross rent multipliers, capitalization rates, prorations, and area calculations. The 40-question Texas State section adds Texas-specific formulas: property tax calculations using per-00 rates, the 00,000 homestead exemption for school district taxes (enacted via the 2023 constitutional amendment — Proposition 4), and the fact that Texas charges no state-level transfer tax. The arithmetic is never beyond multiplication and division. The difficulty is speed and formula selection: knowing which formula to apply before picking up the calculator, then executing in under 90 seconds. For a full picture of what the TREC exam covers beyond math, see what’s on the Texas real estate exam. Math errors are one reason the TREC first-time pass rate sits around 51% — a number you can meaningfully improve by drilling these formulas before exam day.

Formula: Commission = Sale Price × Commission Rate Commission problems are the most frequent math question on the exam. They come in three versions: direct (find the commission amount), rate-finding (find the rate given a dollar amount and sale price), and price-finding (work backward from a target net-to-seller). Worked example: A property sells for 40,000. The listing and selling brokerages split a 6% total commission equally. Each broker pays their agent 55% of the broker’s portion. How much does the selling agent earn? Step 1: Total commission = 40,000 × 0.06 = 0,400 Step 2: Each broker’s share = 0,400 ÷ 2 = 0,200 Step 3: Selling agent’s share = 0,200 × 0.55 = ,610 Net-to-seller problems work in reverse. If a seller needs to net 95,000 after a 6% commission, the required sale price is 95,000 ÷ 0.94 = 13,830. One Texas-specific rule: per TREC commission structure, commissions are always set by written agreement — they are never fixed by TREC or any industry standard. An exam question implying a “standard” Texas commission rate is testing whether you recognize that commissions are negotiable.

Three related formulas: • LTV = Loan Amount ÷ Property Value • Down Payment = Purchase Price × Down Payment Percentage • Loan Amount = Purchase Price − Down Payment • Points: 1 point = 1% of the loan amount (not the purchase price) LTV example: A buyer gets a 72,000 loan to purchase a 20,000 home. What is the LTV ratio? LTV = 72,000 ÷ 20,000 = 0.85 = 85% LTV. This buyer exceeds the 80% conventional threshold and would typically pay private mortgage insurance (PMI). Points example: A borrower takes a 40,000 loan and pays 1.5 discount points to reduce the interest rate. What do the points cost? 1.5 points = 1.5% × 40,000 = ,600 The exam’s most frequent trap: calculating points on the purchase price instead of the loan amount. If a buyer purchases a 80,000 home with 10% down, the loan is 52,000 — and 1 point costs ,520, not ,800. Always calculate points from the loan amount. Minimum down payments every candidate must know: FHA requires 3.5% down (for borrowers with a 580+ credit score); VA loans require zero down but charge a funding fee; conventional loans can go as low as 3% down with PMI. These numbers appear on the National section of the exam.

The income approach values a property based on what it earns. Two tools — the IRV triangle for capitalization, and the Gross Rent Multiplier — appear regularly on the National section. IRV triangle (Income = Rate × Value): • Cap Rate = NOI ÷ Property Value • Property Value = NOI ÷ Cap Rate • NOI = Property Value × Cap Rate Cap rate example: An apartment building generates 4,000 in annual net operating income. Comparable properties in the area sell at a 6% cap rate. What is the indicated value? Value = 4,000 ÷ 0.06 = 00,000 Gross Rent Multiplier (GRM): • GRM = Sale Price ÷ Annual Gross Rents • Value = Annual Gross Rents × GRM GRM example: A triplex rents for ,100/month per unit. Comparable triplexes sell at a GRM of 110. What is the indicated value? Annual Gross Rents = ,100 × 3 units × 12 months = 9,600 Value = 9,600 × 110 = ,356,000 Critical distinction: GRM uses gross rents (before expenses). Cap rate uses net operating income (after operating expenses, but before mortgage payments and income taxes). NOI deducts management fees, maintenance, insurance, property taxes, and utilities — it does not deduct the mortgage. For a breakdown of all three methods of estimating value — income, sales comparison, and cost — review the appraisal chapter.

Texas has no state income tax, but combined property tax rates — county, city, school district, and special districts layered together — typically run 1.8%–2.5% of appraised value annually, among the highest in the nation. Texas expresses tax rates as a dollar amount per 00 of appraised value: Formula: Annual Tax = (Appraised Value ÷ 100) × Tax Rate per 00 Example: A home is appraised at 75,000. The combined rate is .40 per 00 of value. What is the annual property tax? Annual Tax = (75,000 ÷ 100) × .40 = 3,750 × .40 = ,000 Homestead exemption math: The general homestead exemption for school district taxes is 00,000, established by the 2023 Texas constitutional amendment (Proposition 4). This exempts the first 00,000 of a primary residence’s appraised value from school district taxation. Example with exemption: The same 75,000 home has a 00,000 school homestead exemption. The school rate is .10 per 00. What is the school district portion? Taxable value for school = 75,000 − 00,000 = 75,000 School tax = (75,000 ÷ 100) × .10 = 2,750 × .10 = ,025 No Texas transfer tax: Texas charges no state-level real estate transfer tax. California charges .10 per ,000 of value; Florida charges /bin/bash.70 per 00. Texas charges zero at the state level. The homestead exemptions chapter covers additional exemptions: an extra 0,000 school exemption for owners over 65, and disabled veteran exemptions up to 100% of appraised value for a 100% service-connected disability rating.

Prorations divide ongoing costs between buyer and seller at the closing date. The seller pays for days they owned the property; the buyer takes responsibility starting on closing day. Formula: Per Diem Rate = Annual Amount ÷ 365 Prorated Amount = Per Diem Rate × Number of Days Property tax proration example: Annual property taxes are ,475. The property closes on March 20. The seller is responsible from January 1 through the day before closing (March 19). How much does the seller owe? Days January 1–March 19: 31 (Jan) + 28 (Feb) + 19 (Mar) = 78 days Per diem = ,475 ÷ 365 = 5.00 per day Seller’s share = 5.00 × 78 = ,170 This ,170 appears as a seller debit and a buyer credit on the settlement and closing statement — the Closing Disclosure that replaced the HUD-1 under the 2015 TRID rules. Rent prorations work in reverse: if a seller has already collected a full month’s rent and closes mid-month, the seller owes the buyer a credit for the remaining days of the month that the buyer will now own the property. Read every proration problem carefully for two details: (1) whether the closing date counts as a buyer or seller day, and (2) whether the problem uses a 365-day calendar year or a 360-day banker’s year. The standard TREC exam uses 365 unless otherwise specified.

Area formulas: Rectangle: Length × Width Triangle: (Base × Height) ÷ 2 Value per square foot: Sale Price ÷ Total Square Footage Example: A rectangular lot is 90 ft wide and 160 ft deep. It sold for 2,000. What did the buyer pay per square foot? Area = 90 × 160 = 14,400 sq ft Price = 2,000 ÷ 14,400 = .00 per sq ft Straight-line depreciation (cost approach): Annual Depreciation = (Replacement Cost − Land Value) ÷ Economic Life Accrued Depreciation = Annual Depreciation × Building Age Indicated Value = Replacement Cost − Accrued Depreciation + Land Value Crucial rule: land is never depreciated. Remove land value before calculating building depreciation, then add it back at the end. A 00,000 building with a 40-year economic life at 10 years of age: annual depreciation = 00,000 ÷ 40 = ,500; accrued = ,500 × 10 = 5,000. With land worth 0,000: indicated value = 00,000 − 5,000 + 0,000 = 05,000. Profit/loss: Net Profit = Sale Price − (Purchase Price + Improvements + Selling Costs) Four study habits that separate candidates who ace math from those who freeze: (1) Memorize the 8 core formulas before touching practice problems — not after. (2) Identify the question type before calculating; most errors come from using the right formula on the wrong input. (3) Practice with a basic four-function calculator only — that is exactly what Pearson VUE provides. (4) Do every problem twice: solve for the asked variable, then solve for a different variable using the same data to build fluency in all three directions. Day One generates full-length TREC-weighted practice exams with math questions appearing in the same proportion as the real National and State sections — with step-by-step worked solutions for every problem so you learn the process, not just the answer.