Resource
Mortgage Glossary
22 terms defined · Your complete reference
Amortization
The process of paying off a loan over time through regular payments that cover both principal and interest.
APR (Annual Percentage Rate)
The total annual cost of borrowing, including interest rate plus fees, expressed as a percentage.
Appraisal
A professional assessment of a property's market value, required by lenders before approving a mortgage.
ARM (Adjustable-Rate Mortgage)
A mortgage with an interest rate that changes periodically after an initial fixed-rate period.
Closing Costs
Fees paid at the completion of a real estate transaction, including origination, title, appraisal, and escrow fees.
Conventional Loan
A mortgage not backed by a government agency. Typically requires higher credit scores and larger down payments than government loans.
Debt-to-Income Ratio (DTI)
The percentage of your gross monthly income that goes toward debt payments. Lenders use this to assess your ability to repay.
DSCR (Debt Service Coverage Ratio)
The ratio of a property's net operating income to its mortgage payment. Used to qualify investment properties.
Down Payment
The upfront cash payment you make when purchasing a home, expressed as a percentage of the purchase price.
Equity
The difference between your home's market value and your remaining mortgage balance.
Escrow
A third-party account that holds funds for property taxes and insurance, paid as part of your monthly mortgage payment.
FHA Loan
A government-backed loan insured by the Federal Housing Administration, allowing lower credit scores and smaller down payments.
HELOC
Home Equity Line of Credit — a revolving credit line secured by your home's equity.
Jumbo Loan
A mortgage that exceeds Fannie Mae/Freddie Mac conforming loan limits.
LTV (Loan-to-Value Ratio)
The ratio of the loan amount to the property's appraised value, expressed as a percentage.
Non-QM (Non-Qualified Mortgage)
Loans that don't meet Qualified Mortgage standards — designed for borrowers with non-traditional income or credit profiles.
PMI (Private Mortgage Insurance)
Insurance required when your down payment is less than 20%, protecting the lender if you default.
Pre-Approval
A conditional commitment from a lender to finance a specific amount, based on verified credit, income, and assets.
Rate Lock
An agreement with a lender to hold a specific interest rate for a set period while your loan is processed.
Title Insurance
Insurance that protects the lender and/or buyer against defects in the property's title.
Underwriting
The process by which a lender evaluates the risk of a loan and determines whether to approve it.
VA Loan
A government-backed loan for eligible veterans, active-duty service members, and surviving spouses, offering zero down payment.