What is the exam-ready answer?
| Roadmap post | 245 of 500 |
|---|---|
| Official syllabus topic | XI.B.4 General Concepts: Discount points and loan origination fees |
| Official PSI area | Real Estate Calculations |
| Published weight | 7% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
| Content checked through | August 2, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual calculation. Follow the stated facts, units, time basis, and rounding instruction.
Formula and variables
| Symbol or term | Meaning |
|---|---|
| Loan amount | The amount financed and the percentage base for points |
| Points | Each point equals 1% of the loan amount, including fractional points |
| Origination percentage | The stated lender fee percentage applied to the loan amount |
Step-by-step method
- Identify the loan amount and ignore the sale price unless it is needed first to find the loan.
- Convert points or the origination percentage to a decimal.
- Multiply the loan amount by that decimal.
- Keep discount points and origination fees as separate line items if both are charged.
- Do not infer a fixed interest-rate reduction per point because the question or lender must state it.
Georgia-specific distinction
Worked examples
Example 1: Fractional discount points
Scenario. A borrower pays 1.25 discount points on a $288,000 loan.
- 1.25 points = 1.25% = 0.0125.
- $288,000 x 0.0125 = $3,600.
Answer. The discount points cost $3,600.
Reasonableness check. One point is $2,880 and one-quarter point is $720, totaling $3,600.
Example 2: Points plus origination
Scenario. A $240,000 loan charges 0.5 discount point and a 1% origination fee.
- Discount point cost = $240,000 x 0.005 = $1,200.
- Origination fee = $240,000 x 0.01 = $2,400.
- Combined stated charges = $3,600.
Answer. The two charges total $3,600.
Reasonableness check. The percentages total 1.5% of the loan, and 1.5% of $240,000 is $3,600.
Common exam traps
- Taking the percentage of the sale price instead of the loan
- Treating 1.5 points as 15%
- Assuming one point always lowers the interest rate by a fixed amount
- Combining an origination fee with discount points before identifying what each charge means
Original practice questions with detailed explanations
These original instructional questions map to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Write the setup before opening the explanation.
Question 1What is the cost of 2 points on a $175,000 loan?
- A. $350
- B. $1,750
- C. $3,500
- D. $35,000
Show answer and explanation →
Answer: C. $3,500
Two points equal 2% of the loan. $175,000 x 0.02 = $3,500.
Question 2A 1.5% origination fee is charged on a $260,000 loan. What is the fee?
- A. $2,600
- B. $3,900
- C. $15,000
- D. $39,000
Show answer and explanation →
Answer: B. $3,900
$260,000 x 0.015 = $3,900.
Question 3Which statement about discount points is accurate?
- A. One point is 1% of sale price
- B. One point is 1% of loan amount
- C. One point always reduces the rate by 1%
- D. Points are calculated from assessed value
Show answer and explanation →
Answer: B. One point is 1% of loan amount
One point equals 1% of the loan amount. The interest-rate reduction per point is not fixed.
Mastery tracking
Mark this calculation mastered only when every statement is true.
- I use loan amount as the percentage base.
- I convert fractional points to percentages and decimals.
- I calculate points and origination fees separately.
- I do not claim a fixed rate reduction per point.
- I can add multiple loan charges without mixing their purposes.
Recommended next lesson
Continue with Equity Calculations. Compare current property value with current secured debt.
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