Resources
A Home Financing Glossary & Education Hub
Plain-English definitions for the terms you'll hear throughout the financing process, plus links to every guide on this site.
Glossary
Terms worth knowing before you talk to a lender
Home financing comes with its own vocabulary, and most of it isn't explained the first time you hear it. Here are the terms that come up most often, defined plainly — no assumed background knowledge required.
Pre-Qualification
A quick, informal estimate of what you might be able to borrow, based on information you self-report to a lender — not yet verified.
Pre-Approval
A more thorough step where a lender actually verifies your income, assets, and credit, resulting in a conditional commitment you can shop with.
Down Payment
The portion of the purchase price you pay upfront, in cash, rather than financing. Requirements vary widely by loan program.
Conforming Loan
A loan that meets Fannie Mae and Freddie Mac's guidelines, including a maximum loan amount that varies by county.
Jumbo Loan
Any loan amount that exceeds the conforming loan limit for the county where the property is located.
Debt-to-Income Ratio (DTI)
Your total monthly debt payments divided by your gross monthly income — a key number lenders use alongside credit score.
Loan-to-Value Ratio (LTV)
Your loan amount divided by the appraised value of the property — a measure of how much equity or down payment is involved.
Draw Schedule
The plan for releasing construction loan funds in stages as work is completed and verified, rather than as one lump sum.
One-Time-Close Loan
A construction loan that automatically converts to permanent mortgage financing once the build is complete, with a single closing.
Two-Close Loan
A construction loan that requires a second, separate closing to refinance into permanent financing once the build is done.
HELOC
A home equity line of credit — a revolving line of credit secured by your home's equity, which you can draw from as needed.
Cash-Out Refinance
Replacing your mortgage with a larger loan and receiving the difference in cash, based on your home's equity.
Rate-and-Term Refinance
Replacing your existing mortgage with a new one to change the rate and/or term, without taking cash out.
Escrow
An account, typically managed by your loan servicer, that holds funds for property taxes and insurance and pays them on your behalf.
Underwriting
The lender's process of verifying your financial information and evaluating risk before final loan approval.
Closing Costs
Fees associated with finalizing a loan — appraisal, title, origination, and other charges — typically paid at closing.
Loan Program Guides
Go deeper on the program that fits your situation
First-Time Homebuyer
First-Time Homebuyer Program
Understand the realistic path to your first home purchase before you ever sit down with a lender.
HELOC Loans
HELOC Loans
Understand how a HELOC works and whether it fits your situation before you apply.
Refinance
Home Loan Refinance
Get a clear-eyed look at whether refinancing could make sense for your situation.
Construction Loans
Construction Loans / New-Build Financing
Understand how new-construction financing is structured before you talk to a builder or lender.
Jumbo Loans
Jumbo Loans
Understand what changes once your loan amount exceeds conforming limits.
Land + Build Packages
Land + Build Packages
Know your options for financing land and build costs together, or structuring the two separately.
Credit & Pre-Approval
Credit & Pre-Approval Basics
Know roughly where you stand before you apply, and what to work on if you're not there yet.
Further Reading
From the blog
Flagship Guide
The Complete Guide to Home Financing: From First Purchase to New Construction
A start-to-finish walkthrough of how home financing actually works, from your first pre-approval conversation to closing day, whichever path you're on.
Article
HELOC vs. Cash-Out Refinance: How to Think About the Choice
Both let you borrow against equity you've built, but they work differently and fit different situations. Here's how to think through the choice.
Article
5 Mistakes First-Time Homebuyers Make Before Talking to a Lender
A handful of avoidable missteps show up again and again with first-time buyers. Here's what to watch for before you make an offer.
Article
How Construction Loan Draw Schedules Work for a New-Build Home
The typical draw stages on a new-build home, how inspections trigger a disbursement, and how to keep cash flow steady mid-project.
Ready to talk about your specific situation?
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