Mortgage words, translated

The cash you put in up front, expressed as a percentage of the price. The famous 20% is not a requirement — conventional loans start at 3% for first-time buyers, FHA at 3.5%, VA and USDA at $0. The 20% line only decides whether you pay PMI.

A monthly fee on conventional loans with less than 20% down. It protects the lender, not you — but it's what makes low-down-payment buying possible, and it drops off once you have enough equity. Usually far cheaper than years of extra renting.

The transaction costs of getting a mortgage — appraisal, title, recording, lender fees, prepaid taxes and insurance. Typically 2–5% of the loan. They can sometimes be rolled in, credited by the seller, or covered by assistance programs.

A holding account your servicer runs. Each month, a slice of your payment goes in; when property taxes and insurance come due, the servicer pays them from it. It's autopay for the annoying parts of homeownership.

Optional prepaid interest: pay more at closing, get a lower rate for the life of the loan. Whether points make sense is pure math — how long you'll keep the loan versus the upfront cost. It's a calculation, not a vibe.

The interest rate plus most loan costs, expressed as one annualized number so loans can be compared apples-to-apples. If the APR is much higher than the rate, the loan is fee-heavy — a useful tell when comparing offers.

A good-faith deposit (often ~1% of the price) you put down when your offer is accepted. It's not an extra cost — it's credited back to you at closing. Walk away without a valid contingency, though, and the seller may keep it.

A lender's verified statement of what you can borrow, based on your actual documents and credit. Stronger than "pre-qualified" (which is just a chat). In competitive markets, offers without one often don't get read twice.

Your monthly debt payments divided by gross monthly income. It's the number underwriting cares about most. Note it uses payments, not balances — a big student loan total with a small monthly payment hurts less than people fear.

The three-digit number lenders use to price risk. Conventional loans generally start around 620; the best pricing starts around 740. Small fixes — utilization, an old collection — can move it faster than you'd think.

The loan amount as a percentage of the home's value. 10% down = 90% LTV. It drives PMI, pricing, and program eligibility. As you pay down the loan (or the home appreciates), LTV drops and options open up.

Money left over after closing, measured in months of house payments. Not always required, but underwriting likes seeing you're not scraping the account to zero on closing day — and honestly, so should you.

Down payment money given (not lent) by family. Completely allowed on most programs — there's just a paper trail: a signed gift letter and documentation of the transfer. Lenders verify it's a gift, not a secret loan.

The verification phase where a human (plus software) confirms everything in your file: income, assets, credit, appraisal. When people say a loan is "in underwriting," it means the file is being checked, not that anything is wrong.

An independent professional's opinion of the home's value, ordered by the lender. It protects you from dramatically overpaying and the lender from over-lending. If it comes in low, that's a negotiation moment — not necessarily a dead deal.

Freezing your interest rate for a set window (often 30–60 days) so market moves can't change your deal while the loan closes. When to lock is a judgment call — one your loan officer should be making with you, not for you.

An "only if" clause in your offer — financing, inspection, appraisal. Contingencies are your legal exits if something goes wrong. Waiving them makes offers stronger but riskier; that trade-off deserves a real conversation.

Underwriting's final sign-off: every condition met, loan fully approved, closing can be scheduled. The best three words in the process. From CTC, you're typically days from keys.

The final, binding statement of your numbers — rate, payment, cash to close. Federal law requires you get it at least three business days before signing, so surprises at the closing table are literally illegal.

Title is the legal ownership record; title insurance protects against problems in it (old liens, clerical errors, surprise heirs). One-time cost at closing for peace of mind that lasts as long as you own the home.