Guides › Updated 2026-10-31
Real Estate Math Formulas Cheat Sheet With Worked Examples
TL;DR: Most exam math is one of three moves: take a percent of a number, divide an income by a rate, or multiply two dimensions. Below is every formula we teach, in tables, each with a worked example whose arithmetic we have checked. Where a convention matters (like a 360-day year), the exam question will say which one to use.
How to use this sheet
Read the formula, cover the example, and rebuild it yourself. Convert every percent to a decimal first (6% = 0.06), and write units next to every number. For a deeper walk-through of the trickiest family, see our guide to prorations. The short reference version also lives at /real-estate-math-formulas/.
Commission and sale price
| Formula | Worked example |
|---|---|
| Commission = Sale price x Rate | $385,000 x 0.06 = $23,100 |
| Sale price = Commission / Rate | $14,400 / 0.06 = $240,000 |
| Rate = Commission / Sale price | $9,100 / $260,000 = 0.035 = 3.5% |
| Net to seller = Price - Commission - Payoff - Other costs | $410,000 - $24,600 - $212,500 - $6,150 = $166,750 |
| Price for a target net = Net / (1 - Rate) | $282,000 / 0.94 = $300,000 |
More variations are in commission math examples.
Loans and qualifying
| Formula | Worked example |
|---|---|
| LTV = Loan / lower of price or appraisal | $276,000 / $345,000 (price $345,000, appraisal $350,000) = 80% |
| Discount points = Loan x points / 100 | $300,000 x 2% = $6,000 |
| Monthly interest = Balance x Annual rate / 12 | $240,000 x 0.06 / 12 = $1,200 |
| PITI = P&I + Taxes/12 + Insurance/12 | $1,500 + $3,600/12 + $1,200/12 = $1,900 |
| Front-end limit = Monthly gross income x 28% | $84,000 / 12 = $7,000; x 0.28 = $1,960 |
| Back-end room = Income x 36% - Other debts | $7,000 x 0.36 = $2,520; - $400 = $2,120 |
The 28% and 36% ratios are common teaching figures. If a question gives different limits, use the question’s numbers.
Area, volume and land
| Formula | Worked example |
|---|---|
| Rectangle = L x W | 80 ft x 125 ft = 10,000 sq ft |
| Triangle = 1/2 x Base x Height | 1/2 x 120 x 80 = 4,800 sq ft |
| Sq yd = Sq ft / 9 | 15 x 12 = 180 sq ft; / 9 = 20 sq yd |
| Acres = Sq ft / 43,560 | 87,120 / 43,560 = 2 acres |
| Section = 640 acres | NE 1/4 of NE 1/4: 640 x 0.25 x 0.25 = 40 acres |
Details and more shapes: area and acreage math.
Property tax
| Formula | Worked example |
|---|---|
| Assessed value = Market value x Assessment ratio | $300,000 x 0.50 = $150,000 |
| Tax = Assessed value / 1,000 x Mills | $150,000 / 1,000 x 28 = $4,200 |
One mill is $1 per $1,000 of assessed value. See mills explained.
Prorations (30-day months, 360-day year)
| Formula | Worked example |
|---|---|
| Daily rate = Annual amount / 360 | $4,320 / 360 = $12 per day |
| Seller’s share = Daily rate x Days owned | Jan 1 to June 14 = 5 x 30 + 14 = 164 days; $12 x 164 = $1,968 |
| Rent credit to buyer = Monthly rent / 30 x Buyer’s days | $1,500 / 30 = $50; closing on the 18th, buyer owns days 18-30 = 13 days; $50 x 13 = $650 |
This sheet assumes the buyer owns the day of closing. Your question may say otherwise, so read it before you count days.
Income property and appraisal
| Formula | Worked example |
|---|---|
| NOI = Potential income - Vacancy - Expenses | 10 units x $1,000 x 12 = $120,000; less 5% = $114,000; less $42,000 = $72,000 |
| Cap rate = NOI / Value | $54,000 / $600,000 = 9% |
| Value = NOI / Cap rate | $54,000 / 0.09 = $600,000 |
| GRM = Price / Monthly rent | $270,000 / $1,800 = 150 |
| Percent change = (New - Old) / Old | ($230,000 - $200,000) / $200,000 = 15% |
| Price per sq ft = Price / Sq ft | 2,000 sq ft at $195 gives $390,000 (reverse: $390,000 / 2,000) |
| Adjusted comp = Comp price - features the comp has + features it lacks | $300,000 - $10,000 (garage) + $15,000 (pool) = $305,000 |
| Cost approach = Replacement cost - Depreciation + Land | $320,000 x 0.80 = $256,000; + $90,000 = $346,000 |
| Straight-line depreciation = Cost / Life | $300,000 / 40 = $7,500 per year |
| Equity = Value - All liens | $350,000 - $210,000 - $25,000 = $115,000 |
The five slips that cost the most points
- Forgetting to convert percent to decimal. 6% is 0.06, not 6.
- Dividing when you should multiply. Ask yourself: should the answer be bigger or smaller than the starting number?
- Annual versus monthly. Interest, taxes and insurance are often yearly figures inside a monthly question.
- Using the wrong value in LTV. Lenders use the lower of price or appraisal.
- Assuming a convention. Days in a year, who owns the closing day: the question states them.
Practice and a note on calculators
Calculator rules differ by testing provider and state, so confirm what is allowed in your candidate handbook before test day. Write each formula from memory once a day, then do five problems.
Ready to test yourself? Take the free quiz for your state, such as Texas, Florida, California or New York, or open the GablePrep app for step-by-step math solutions.
GablePrep is an independent study resource. We are not affiliated with any state real estate commission or testing provider, we are not a pre-licensing course, and this is not legal advice. Confirm exam content and rules in your state’s official handbook.
Frequently asked questions
Do I need to memorize every real estate math formula?
Mostly yes, but they cluster into a few patterns: percentage of a whole (commission, LTV, points), income divided by a rate (cap rate, mills), and area times a unit price. Learn the pattern and the specific formulas become variations of it.
Should I use 360 or 365 days for prorations?
Use whatever the question states. Many exam questions specify a 360-day year with 30-day months, and when they do, that convention overrides everything else. If the question is silent, follow the convention in your state's candidate handbook or course materials.
Are formulas the same in every state?
The arithmetic is the same everywhere. What changes is conventions and legal details, such as how local taxes are assessed. Check your state's handbook for the content outline and calculator rules.
How do I practice the math?
Work problems on paper first, then check each step. Our free state quizzes include math questions, and the GablePrep app shows the step-by-step solution for each one.
Independent exam prep. Not affiliated with any state real estate commission or testing provider. Not an approved pre-licensing course. Not legal advice. Facts verified on 2026-10-31; always confirm with your state’s official handbook.