Financing
Loan Estimate
A Loan Estimate is the standardized form that summarizes estimated loan terms, projected payments, closing costs, cash to close, and selected loan features after a mortgage application.
Glossary
Financing
Primary references on this page:
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CFPB: Loan Estimate and Closing Disclosure FormsIt is designed for comparison, not as final closing instructions. Review the interest rate, whether it is locked, principal-and-interest payment, estimated taxes and insurance, loan costs, lender credits, seller credits, cash to close, assumption, prepayment-penalty, and balloon disclosures. Compare equivalent loan structures and lock assumptions.
How loan estimate works
Start with page 1 loan terms and projected payments, then reconcile page 2 costs and page 3 cash to close. Ask the lender to explain every changed assumption and whether a credit is linked to a higher rate. Preserve each version so the final Closing Disclosure can be compared line by line.
Worked example
Two offers can show the same $2,000 principal-and-interest payment but different cash to close because one charges discount points and the other provides a lender credit. Compare rate, APR, loan costs, credits, prepaids, escrow, and the planned holding period—not payment alone.
Common mistakes and review checks
Treat the result or document as one input to a decision. Verify the current source document, definitions, dates, and transaction facts before relying on it.
This is general educational information, not legal or tax advice. Rules vary by state and locality and change over time — check your local law and confirm specifics with a qualified professional.