What is the exam-ready answer?
| Roadmap post | 246 of 500 |
|---|---|
| Official syllabus topic | XI.B.1 General Concepts: Equity |
| 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 |
|---|---|
| Current market value | The property's value at the time described in the question |
| Current secured debt | Outstanding balances of all liens the problem directs you to include |
| Equity | The owner's residual value before selling expenses |
Step-by-step method
- Identify the current property value, not automatically the purchase price.
- Add the current outstanding balances of every stated secured lien.
- Subtract total current secured debt from current value.
- If solving backward, add equity and debt to find value or subtract equity from value to find debt.
- Do not subtract anticipated commission or closing costs unless the question asks for net proceeds rather than equity.
Georgia-specific distinction
Worked examples
Example 1: First and second liens
Scenario. A property is worth $465,000. The first-loan balance is $278,000 and a home-equity lien balance is $32,000.
- Total secured debt = $278,000 + $32,000 = $310,000.
- Equity = $465,000 - $310,000 = $155,000.
Answer. The owner has $155,000 equity.
Reasonableness check. Debt plus equity equals the $465,000 current value.
Example 2: Find value from equity
Scenario. An owner has $94,000 equity and a current secured loan balance of $226,000.
- Value = equity + debt.
- $94,000 + $226,000 = $320,000.
Answer. The property's implied current value is $320,000.
Reasonableness check. $320,000 - $226,000 returns the $94,000 equity.
Common exam traps
- Using the original purchase price instead of current value
- Using the original loan amount instead of current balance
- Forgetting a second secured lien
- Subtracting sales costs when the question asks for equity, not seller net
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 1A home is worth $390,000 and has a $245,000 current mortgage balance. What is equity?
- A. $145,000
- B. $245,000
- C. $390,000
- D. $635,000
Show answer and explanation →
Answer: A. $145,000
$390,000 - $245,000 = $145,000.
Question 2Value is $520,000 and equity is $180,000. What is current secured debt?
- A. $180,000
- B. $340,000
- C. $520,000
- D. $700,000
Show answer and explanation →
Answer: B. $340,000
Debt = value - equity = $520,000 - $180,000 = $340,000.
Question 3Which amount is usually irrelevant to a current equity calculation?
- A. Current market value
- B. Current first-lien balance
- C. Current second-lien balance
- D. Original list price
Show answer and explanation →
Answer: D. Original list price
Current equity depends on current value and current secured debt, not an old asking price.
Mastery tracking
Mark this calculation mastered only when every statement is true.
- I use current value and current lien balances.
- I include multiple secured debts when stated.
- I can rearrange equity, value, and debt.
- I distinguish equity from down payment and seller net.
- I verify that debt plus equity equals value.
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