Mortgage Glossary

The process of paying off a loan over time through regular payments of principal and interest.

The yearly cost of a loan including interest and certain fees, expressed as a percentage. Useful for comparing loans.

A professional estimate of a home's market value, required by lenders to confirm the property is worth the loan amount.

Fees paid at the close of a real estate transaction, typically 2–5% of the loan amount.

A conventional loan that meets the dollar limits set by the Federal Housing Finance Agency.

The percentage of your gross monthly income that goes toward debt payments. Lenders use it to assess affordability.

The portion of a home's price you pay upfront, expressed as a percentage of the purchase price.

The portion of your home you truly own — its market value minus the amount you still owe.

An account held by your lender to collect and pay property taxes and insurance on your behalf.

A mortgage insured by the Federal Housing Administration, popular for low down payments and flexible credit.

A loan whose interest rate stays the same for the entire term.

A mortgage that exceeds conforming loan limits and has stricter qualification requirements.

A standardized 3-page form showing estimated loan terms, payments, and closing costs.

Insurance that protects the lender if a borrower defaults; required on many low-down-payment loans.

Optional upfront fees (1 point = 1% of the loan) paid to lower your interest rate.

A lender's conditional commitment to lend up to a certain amount based on a review of your finances.

The amount of money you borrow, or the remaining balance you owe.

The lender's process of verifying your finances and the property before approving a loan.

A mortgage guaranteed by the Department of Veterans Affairs for eligible service members and veterans.