Mortgage Glossary

A loan with a rate that adjusts periodically after an initial fixed period.

The process of repaying a loan with regular payments that cover interest and reduce principal over time.

A table showing each payment’s interest, principal, and remaining balance over time.

A yearly rate reflecting interest plus certain prepaid finance charges to help compare loans.

Third-party and lender fees paid at closing, often ~3–6% of the loan amount.

A standardized 5-page form with final costs and terms issued before closing.

A conventional mortgage that meets Fannie Mae/Freddie Mac rules and loan limits.

A mortgage not insured or guaranteed by a federal agency (like FHA, VA, or USDA).

The percentage of your gross monthly income used to pay debts.

Optional upfront fees paid to reduce the interest rate.

Your ownership stake in the property: market value minus what you owe.

An account used by your lender/servicer to collect and pay taxes and insurance.

A mortgage insured by the Federal Housing Administration, popular with low-to-moderate income buyers.

A loan with an interest rate that stays the same for the entire term.

Monthly fees paid to a homeowners association for common area maintenance and amenities.

Insurance that protects the structure and belongings; commonly escrowed and paid monthly.

The finance charge you pay to borrow money, calculated on your outstanding balance.

The cost of borrowing the loan principal, expressed as a percentage.

A mortgage that exceeds conforming loan limits and is not eligible for GSE purchase.

A standardized 3-page form showing key loan terms and cost estimates.

The loan amount divided by the property value.

The FHA program’s mortgage insurance, which includes an upfront and an annual component.

An acronym for Principal, Interest, Taxes, and Insurance—the common components of a monthly mortgage payment.

The amount you borrow and must repay. Paying principal reduces your loan balance.

Insurance on many conventional loans with < 20% down that protects the lender if you default.

Annual taxes levied by local governments based on assessed value; often collected monthly via escrow.

Limits on how much an ARM’s interest rate can change at first adjustment, per period, and over the life of the loan.

A lender’s commitment to hold a specific interest rate for a set time while your loan is processed.

Upfront and annual fees on USDA loans that support the program.

A mortgage for eligible rural areas featuring zero down and guarantee fees.

A one-time fee on many VA loans that helps fund the program; exemptions apply for some veterans.

A mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible borrowers; no monthly PMI.