Mortgage jargon, translated

The cash you put toward the purchase up front. Despite the rumor, it does not have to be 20% — conventional loans go as low as 3% for first-time buyers, and VA/USDA can be $0.

The fees to actually complete the loan and transfer the home — lender fees, title, appraisal, prepaid taxes and insurance. Usually about 2–4% of the price, and sometimes negotiable with the seller.

A monthly charge on conventional loans with less than 20% down. It protects the lender, not you — but it's also the thing that lets you buy years sooner. It cancels once you reach 20% equity.

A holding account attached to your mortgage. Part of each payment goes in, and your servicer uses it to pay your property taxes and homeowners insurance for you. One payment, everything handled.

Optional up-front fees paid to lower your interest rate — one point = 1% of the loan amount. Sometimes worth it, sometimes not; the break-even math tells you which.

A deposit (often ~1% of the price) you put down with your offer to show you're serious. It's held by a neutral party and applied toward your purchase at closing.

The part of the home you actually own: current value minus what you owe. It grows as you pay down the loan and as the home appreciates — it's the wealth-building engine of homeownership.

A lender's verified statement of what you can borrow, based on real documents — income, assets, credit. Much stronger than a pre-qualification, which is just an estimate from stated numbers.

Your monthly debt payments divided by your gross monthly income. Lenders use it to gauge how comfortably a mortgage fits. Most programs like to see it under roughly 43–50%.

The three-digit number lenders use to price risk. Conventional programs generally start around 620; better scores unlock better pricing. Small moves — paying down cards, fixing errors — can matter a lot.

Your loan amount divided by the home’s value. Put 5% down and your LTV is 95%. Lower LTV generally means better pricing and, under 80%, no mortgage insurance.

Money left over after closing — measured in months of mortgage payments. Not always required, but reserves strengthen a file and are a genuinely good idea for your own peace of mind.

Down payment money given by a family member. Totally allowed on most programs — there’s just a short paper trail (a gift letter) to document that it’s a gift, not a loan.

An agreement freezing your interest rate for a set window (often 30–60 days) while your loan closes. It protects you if rates rise during the process.

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.

The formal review of your complete file against program guidelines. Follow-up questions here are normal, not bad news — answer quickly and the file keeps moving.

The best three words in the process: underwriting is fully satisfied and the closing can be scheduled. Time to book the moving truck.

The final, official statement of your loan terms and costs, delivered at least three business days before closing so you can review everything with no surprises at the table.