Printable cheat sheet

    Texas real estate discount points and yield cheat sheet

    Built for Texas sales agent exam prep. Use this to keep the base right (the loan amount), separate discount from origination points, and apply the 1/8-of-1%-per-point yield rule.

    Use the calculator
    One point1% of the loan

    A point is 1% of the loan amount, not the price or down payment.

    Cost of pointsLoan x points x 1%

    Multiply the loan by the number of points, then by 1%.

    Yield per pointAbout 1/8 of 1%

    Each discount point raises the lender's yield by about 0.125%.

    Points for yieldGap / per-point

    Divide the yield gap by the yield increase per point.

    Discount vs originationBuy-down vs fee

    Discount points buy down the rate; origination points are a loan fee.

    Points as interestPrepaid interest

    Discount points are prepaid interest paid at closing.

    The exam setup rule

    1. Confirm the base is the loan amount, not the price.
    2. Read whether the points are discount or origination.
    3. Cost equals loan times points times 1%.
    4. Yield increase equals points times the yield per point.
    5. Points needed equals the yield gap divided by the yield per point.

    Five worked examples

    Cost of points$200,000 loan, 4 discount points

    200,000 x 4 x 1% = $8,000.

    Points for yield6.5% note, 7.0% target yield, 1/8% per point

    (7.0 - 6.5) / 0.125 = 4 discount points.

    Single point$325,000 loan, 1 point

    325,000 x 1% = $3,250 for one point.

    Fractional points$180,000 loan, 1.5 points

    180,000 x 1.5 x 1% = $2,700.

    Yield increase3 discount points at 1/8% each

    3 x 0.125% = 0.375% approximate yield increase.

    Traps to check

    1. Do not calculate points on the purchase price; use the loan amount.
    2. Do not confuse discount points with origination points.
    3. Do not assume a yield-per-point value when the question gives one.
    4. Do not treat one point as a flat $1,000.
    5. Do not round fractional points to whole numbers.

    Sanity check

    1. More points cost more and buy a higher lender yield.
    2. One point on a larger loan costs more dollars.
    3. Points needed equals the yield gap divided by the yield per point.
    Practice the patternPass Texas drills points, financing math, and closing costs.

    Use the calculator, Math Coach, Trap Library, and Texas-specific questions at passtexasrealestate.com.

    Get Pass Texas

    Sources: Pearson VUE Texas Real Estate content outline (Financing and Settlement), TREC Candidate Handbook, and CFPB consumer guidance on discount points. The 1/8-of-1%-per-point yield rule is the standard exam convention. For exam prep only, not lending advice.

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