38 terms in plain English, with typical ranges and links to the calculator that runs the math on each one. No jargon-explained-with-more-jargon. If a term comes up in the Loan Estimate, on a closing disclosure, or in conversation with a lender or realtor, it's defined here.
Reviewed May 2026 · Independent housing-cost intelligence
/glossary.html#piti work for sharing.
The schedule by which a loan is paid off — each payment splits between interest (charged on the remaining balance) and principal (the loan-balance paydown). Most U.S. mortgages are fully amortizing, meaning the full balance is paid off by the final scheduled payment.
The total annualized cost of a loan including the interest rate plus origination fees, discount points, and certain other closing costs. APR is typically higher than the stated interest rate. It's required to be disclosed on every Loan Estimate, allowing apples-to-apples comparison across lenders.
A mortgage where the interest rate is fixed for an initial period (typically 5, 7, or 10 years) and then adjusts periodically based on a market index. Lower introductory rates than fixed mortgages; rate-reset risk after the fixed period.
A payment structure where you pay half your monthly amount every two weeks. Because there are 26 biweekly periods in a calendar year, you make the equivalent of 13 monthly payments per year — the extra payment accelerates principal paydown.
The total amount of cash you bring to closing — down payment plus closing costs plus prepaid escrow items, minus any earnest money already deposited and any lender or seller credits.
Fees paid at closing beyond the down payment — typically lender origination, title insurance, recording fees, prepaid taxes/insurance, and inspections. Distinct from the down payment.
A mortgage not backed by a U.S. government program (FHA, VA, USDA). Most are conforming — meeting Fannie Mae and Freddie Mac size and underwriting standards. Down payments range from 3% to 20%+; PMI required below 20% down.
Total monthly debt payments divided by gross monthly income. Lenders use this to assess repayment capacity. Front-end DTI counts only housing costs; back-end DTI includes housing plus all other debt.
Optional upfront fees paid to the lender at closing to lower the interest rate. One point typically costs 1% of loan amount and reduces the rate by ~0.25%. Pays off if you hold long enough; wasted if you sell or refinance early.
Cash paid upfront toward the home price, with the rest financed by the mortgage. Larger down payments mean smaller loan, lower payments, and reduced leverage exposure. The down payment isn't lost — it becomes equity in the home.
A good-faith deposit paid by the buyer when an offer is accepted, held in escrow until closing. Demonstrates serious intent and is typically credited toward closing costs or the down payment at closing.
The portion of the home you own outright — current market value minus remaining mortgage balance. Equity grows through mortgage paydown and home appreciation; it shrinks through depreciation or cash-out borrowing.
An account held by your lender or servicer that collects monthly amounts toward property taxes and homeowners insurance, then pays them when due. Escrow makes the monthly cost predictable; it doesn't change the underlying tax or insurance amounts.
A government-backed loan with lower down-payment requirements (3.5% minimum) and more flexible credit standards than conventional loans. Carries upfront and ongoing MIP for the life of most FHA loans.
A mortgage where the interest rate stays the same for the entire loan term. Predictable payments; no payment-shock risk. The U.S. 30-year fixed-rate mortgage is unusual globally and a major risk-management tool for U.S. buyers.
A revolving credit line secured by your home equity. Variable rate, draw period (typically 10 years) followed by a repayment period (typically 20 years). Used for renovations, debt consolidation, or other large expenses; carries the risk that the home is collateral.
Monthly or quarterly fees paid to a community association covering shared maintenance, amenities, and reserves. Common in condos, townhomes, and many newer single-family communities. Special assessments can add unexpected costs.
The standard homeowners insurance policy for single-family homes. Covers the dwelling on an open-perils basis (anything not specifically excluded) and personal property on a named-perils basis.
Homeowners insurance for condo owners. Covers the interior of the unit (walls-in coverage), personal property, and liability. The condo association's master policy covers the building exterior and common areas.
A mortgage above the conforming loan limit ($806,500 in most counties for 2026, higher in expensive areas). Not eligible for sale to Fannie Mae or Freddie Mac, so underwriting standards and rates can differ from conforming loans.
The loan amount divided by the home's appraised value or sale price (whichever is lower at purchase). LTV of 80% means you're borrowing 80% of the home's value. Lower LTV = lower lender risk = better rates and no PMI requirement.
FHA's version of mortgage insurance. Includes an upfront premium (1.75% of loan amount, typically rolled into the loan) and an annual premium paid monthly. Unlike conventional PMI, MIP often lasts the life of the loan.
A loan secured by the home being purchased — the home is collateral, and the lender can foreclose if payments stop. The lender provides the capital; the borrower repays principal plus interest over the loan term, typically 15-30 years.
A fee charged by the lender for processing the loan, typically priced as a percentage of the loan amount. Distinct from discount points (which buy down the rate). Origination fees appear on the Loan Estimate.
The portion of your mortgage payment that goes to repaying the loan — principal (the borrowed amount) and interest (the cost of borrowing). Distinct from PITI, which adds taxes and insurance.
The four standard components of a U.S. mortgage payment when the lender escrows. PITI is more honest than P&I alone but still leaves out HOA, PMI, and maintenance — which is why True Monthly Cost goes further.
Insurance required on conventional loans with less than 20% down. Protects the lender, not the borrower. Automatically removed when LTV reaches 78% of the original purchase price; can be requested at 80%.
A more rigorous lender review than pre-qualification — typically includes verified income, credit pull, and a conditional approval letter for a specific loan amount. Strengthens an offer; doesn't guarantee final approval (which requires the appraisal and full underwriting).
A fee charged for paying off a mortgage early or making large extra payments. The Qualified Mortgage rule effectively eliminated prepayment penalties on most U.S. owner-occupied home loans originated after 2014.
The amount of money borrowed — the loan balance. Each month, part of your P&I payment reduces principal; the rest goes to interest. As the loan amortizes, more goes to principal and less to interest each month.
An annual tax assessed by local governments on real estate, paid as part of escrow in most U.S. mortgages. Rates vary 5x across U.S. metros — Texas runs ~1.8% effective, California closer to 0.7%, parts of New Jersey clear 2.2%.
A lender agreement to hold a specific rate for a defined period (typically 30–60 days), regardless of how rates move during that window. Protects buyers between application and closing. Some lenders charge for longer locks.
Replacing an existing mortgage with a new one — usually for a lower rate, different term, or to pull cash out (cash-out refi). Carries closing costs that need to be recouped through the rate savings.
Liquid cash kept after closing to cover mortgage payments and emergencies. A serious reserves threshold is six months of full carrying cost (PITI plus HOA plus maintenance) plus a separate emergency fund.
A one-time insurance policy purchased at closing protecting against defects in the home's ownership history (liens, fraud, recording errors). Lender's policy is required; owner's policy is optional but recommended.
The lender's review of your loan application — verifying income, assets, debt, and credit; reviewing the home's appraisal; and confirming the loan meets program requirements. Final approval depends on underwriting clearance.
A government-backed loan for buyers in eligible rural and suburban areas, with no down-payment requirement and competitive rates. Has income limits and property eligibility requirements.
A government-backed loan for eligible veterans and active-duty service members, with no down-payment requirement, no PMI, and competitive rates. Carries a one-time funding fee (waivable for some categories).
If you're looking up a term, you're probably thinking through a specific decision. These are the most-used calculators that match common glossary lookups.
The most complete monthly figure. PITI plus HOA, PMI, and maintenance reserve.
CalculatorDTI, House Poor Risk, three honest price tiers. The right number to actually buy at.
CalculatorYear-by-year and month-by-month breakdown. Where the principal-vs-interest crossover happens.
CalculatorThe honest comparison — including down-payment opportunity cost and transaction costs.
AllThe full catalog. Every tool the platform has, organized by question.
OwningCost exists because consumer mortgage content tends to be either oversimplified or buried under upsell. The Glossary is the platform's reference layer — clean definitions, no jargon, every term linked back to a tool that uses it.