Short, plain-English definitions of the terms you'll meet when getting a mortgage — each with links to deeper guides and the mortgage calculator.
A
- Adjustable-Rate Mortgage (ARM) — a loan whose rate resets with the market after a fixed intro period
- Amortization — how each payment splits between interest and principal
- Annual Percentage Rate (APR) — the interest rate plus lender fees, rolled into one number
- Appraisal — a professional estimate of what the home is actually worth
C
- Closing Costs — the fees due at signing, on top of your down payment
- Conforming Loan — a mortgage that fits Fannie Mae and Freddie Mac's rulebook
- Conventional Loan — a mortgage without government backing, the market default
- Credit Score — the three-digit number that sets your mortgage rate
D
- Debt-to-Income (DTI) Ratio — monthly debts divided by gross income, the affordability gate
- Discount Points — Upfront fees that buy you a lower interest rate
- Down Payment — The cash you pay upfront toward a home's purchase price
E
- Earnest Money — A good-faith deposit that shows the seller you mean business
- Equity — The share of your home's value that you actually own
- Escrow — A neutral account that holds funds for taxes, insurance, or a deal
F
- FHA Loan — A government-insured mortgage with a low minimum down payment
- Fixed-Rate Mortgage — A loan whose interest rate never changes for the entire term
- Foreclosure — The legal process a lender uses to seize a home after missed payments
H
- HOA Fees — Recurring dues that fund shared amenities in a managed community
- Home Inspection — A professional checkup of a home's condition before you buy
- Homeowners Insurance — Coverage that protects your home — and the lender that financed it
I
- Interest Rate — The price you pay to borrow, expressed as a yearly percentage
J
- Jumbo Loan — A mortgage too big to be conforming, with stricter requirements
L
- Lien — A legal claim on your home that secures a debt
- Loan Estimate — The standard form that spells out a mortgage offer's true cost
- Loan-to-Value (LTV) Ratio — Your loan amount as a percentage of the home's value
O
- Origination Fee — The lender's fee for setting up your loan
P
- Preapproval — A lender's conditional yes before you go house hunting
- Principal — The amount you borrowed, before interest — the core of your loan
- Private Mortgage Insurance (PMI) — Extra monthly cost when you put less than 20% down
- Property Tax — The local tax on your home, usually paid through escrow
R
- Rate Lock — Freezes your quoted rate while your loan gets to closing
- Refinancing — Swapping your current mortgage for a new one on better terms
T
- Title Insurance — One-time policy against ownership disputes and hidden liens
U
- Underwriting — The lender's final deep-dive before your loan is approved
- USDA Loan — Zero-down government-backed loan for eligible rural areas
V
- VA Loan — Zero-down loan benefit for veterans and service members