Plain-English glossary

A loan whose rate can change after an initial fixed period, so your payment can rise or fall over time.

The schedule by which your loan is paid off; early on most of each payment is interest, later most goes to principal.

The yearly cost of the loan including the rate plus most fees, so it usually runs a bit higher than the rate; handy for comparing lenders.

A licensed appraiser's independent opinion of the home's value — not its price — which the lender uses to make sure the loan isn't larger than the property supports.

The increase in a home's value over time; the rate you assume drives any rent-vs-buy comparison.

Paying half your monthly payment every two weeks — 26 halves a year, which equals one extra full payment annually.

The point where an upfront cost (points, refinance fees) has been recovered by the monthly savings it bought.

The VA document proving your entitlement — how much you have, what's charged to a kept loan, and whether you're funding-fee exempt; lenders usually pull it electronically in minutes.

One-time fees to finalize the loan and purchase — lender fees, title, taxes, prepaids — usually a few percent of the price.

The final statement of your exact loan terms and costs; you must receive it at least three business days before closing.

A conventional loan that fits Fannie Mae / Freddie Mac size limits, so it qualifies for standard pricing.

A loan not backed by a government program (FHA/VA/USDA); usually needs decent credit and 3%+ down.

Your monthly debt payments divided by gross monthly income; lenders use it to judge what you can afford.

Optional upfront fees to buy down your rate; one point is 1% of the loan.

The cash you put toward the purchase up front; the rest is the loan.

A good-faith deposit when your offer is accepted; applied to your costs at closing.

The part of the home you own — its value minus what you still owe.

An account the lender uses to collect and pay your taxes and insurance with your payment; also the neutral party holding funds during closing.

A government-backed loan with lower down-payment and credit requirements, in exchange for mortgage insurance.

A loan whose rate — and principal-and-interest payment — stays the same for the whole term.

Money from family or an allowed source toward your down payment; needs a gift letter and proof of transfer.

Coverage protecting the home; lenders require it and usually collect it through escrow.

A loan larger than the conforming limit; stricter requirements because it can't be sold to Fannie/Freddie.

Money from the lender toward your closing costs in exchange for a higher rate — discount points in reverse.

A standardized form showing your loan's rate, payment, and costs; you get it within three business days of applying, built for comparing lenders.

How long the loan is scheduled to last — shorter terms mean higher payments but far less total interest.

The loan amount divided by the home's value; lower LTV (more equity) usually means better terms and no PMI.

FHA's mortgage insurance; depending on your down payment it can last the life of the loan.

The national registry of mortgage companies and loan officers; every legitimate one has an NMLS ID you can verify for free.

What money could have earned elsewhere — the return a renter's would-be down payment makes if invested instead.

What the lender charges to process and underwrite your loan; negotiable.

The four parts of a typical payment: principal, interest, taxes, insurance.

A lender's written, conditional statement that you qualify for a loan amount based on verified income, assets, and credit — not a commitment to lend; final approval depends on the property and underwriting.

A rough estimate of what you might borrow based on info you provide, without verification.

Upfront amounts for taxes, insurance, and interest you pre-fund at closing; costs, not fees.

Paying extra toward principal ahead of schedule, which shortens the loan and cuts total interest.

A fee some loans charge for paying off early — rare on recent consumer mortgages, but worth confirming before you prepay.

The amount you borrowed and still owe, separate from interest.

The core loan payment — repaying what you borrowed plus the cost of borrowing it; taxes and insurance ride on top.

Insurance on a conventional loan when you put less than 20% down; cancellable as you build equity.

A lender's guarantee to hold your rate for a set window while you close.

Paying a lump sum toward principal and having the lender re-amortize, lowering your payment at the same rate.

Replacing your current mortgage with a new one, usually to lower the rate or change the term.

Savings the lender wants to see you'll have left after closing, often measured in months of payments.

The income left over each month after housing costs and debts; VA sets regional minimums by family size, and it's the test that can approve a file a plain DTI number would flag.

Closing costs the seller agrees to cover for you, within limits set by the loan type.

The company that collects your payments and manages escrow after closing — often not the lender you applied with.

A policy protecting you and the lender against title problems; you can shop for it.

A one-time state or local tax when a property's title changes hands, usually a percentage of the sale price.

Your mortgage credit inquiry sold to other lenders so they can solicit you — now banned by federal law in most cases.

The lender's process of verifying your finances and the property to decide approval.

A government-backed loan for eligible rural/suburban buyers, often no down payment.

The amount VA guarantees for your loans; what's not tied up in a kept VA loan determines your next $0-down ceiling.

A one-time VA charge — typically 1.25% to 3.3% of the loan on a purchase — that keeps the program running; usually financed into the loan, higher on repeat use, and waived for veterans receiving VA disability compensation, surviving spouses receiving Dependency and Indemnity Compensation, and active-duty Purple Heart recipients.

A government-backed loan for eligible veterans and service members, often no down payment and no monthly mortgage insurance.