Mortgage glossary

Plain-English definitions for the mortgage terms you'll see while shopping rates. Informational only. Comparison only. We are not a lender. Affiliate commission may be earned on partner clicks.

APR (Annual Percentage Rate): The yearly cost of the loan including interest + most lender fees, expressed as a percentage. Always higher than the note rate.
P&I (Principal & Interest): The monthly payment that pays down your loan balance + the interest the lender charges.
PITI: P&I + property Tax + homeowners Insurance. The full monthly housing payment most lenders use to qualify you.
PMI (Private Mortgage Insurance): Insurance you pay when your down payment is less than 20% of the home price on a conventional loan. Usually 0.3%-1.5% of the loan annually. Removed when LTV reaches 78%-80%.
LTV (Loan-to-Value): Loan amount divided by home price (or appraised value). 80% LTV or below typically avoids PMI.
DTI (Debt-to-Income): All your monthly debt payments divided by gross monthly income. Most conventional lenders want DTI under 43% (front-end) / 50% (back-end).
FHA Loan: A mortgage insured by the Federal Housing Administration. Allows down payments as low as 3.5% with credit scores starting at 580.
VA Loan: A mortgage backed by the Department of Veterans Affairs. Available to eligible veterans, active-duty service members, and certain National Guard / Reserve members. $0 down possible.
USDA Loan: A mortgage backed by the US Department of Agriculture for rural and some suburban areas. $0 down possible.
Jumbo Loan: A mortgage above the conforming loan limit (in 2026, $766,550 in most US counties). Higher credit standards, often higher rates.
Conventional Loan: A mortgage not backed by any government agency. Conforms to Fannie Mae / Freddie Mac guidelines if under the conforming loan limit.
Refinance: Replacing your existing mortgage with a new one (usually at a lower rate or different term). Includes closing costs; break-even is when monthly savings recoup those costs.
Cash-Out Refinance: A refinance that borrows more than you owe so you receive the difference as cash. Increases your loan balance.
HELOC (Home Equity Line of Credit): A revolving credit line secured by your home equity. Variable rate. Draw and repay like a credit card during the draw period.
Home Equity Loan: A lump-sum second mortgage secured by your home equity. Fixed rate. Repaid in equal monthly payments.
Closing Costs: Fees due at the close of a mortgage (origination, title, escrow, appraisal, recording, etc.). Typically 2-5% of the loan amount.
Origination Fee: The lender's fee for processing the loan. Typically 0.5%-1% of the loan amount.
Discount Points: Optional upfront fee (1 point = 1% of the loan) paid to lower the interest rate. "Buying down the rate."
Escrow Account: An account the lender holds where your monthly property tax + insurance portion are deposited and paid on your behalf when due.
Pre-Approval vs Pre-Qualification: Pre-qualification is a casual estimate based on self-reported info. Pre-approval is a lender's written commitment based on a credit check and document verification.
Rate Lock: The lender agrees to honor a specific interest rate for a set period (typically 30-90 days) while you close.
MLO (Mortgage Loan Originator): A licensed individual who takes residential loan applications or offers / negotiates loan terms. MortgagePulse is not an MLO and never acts as one. We only present advertised rate ranges.
SAFE Act: The Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Requires MLOs to be licensed in every state where they originate loans. Section §1503 carves out informational comparison services that do not transmit applications -- the carve-out MortgagePulse operates under.

Recommended reading

The Total Money Makeover

Home Buying Kit For Dummies

The Mortgage Encyclopedia

Your Money or Your Life

The Book on Rental Property Investing

The First-Time Homebuyer Book