What a Loan Estimate Tells You — and How to Read It

The top of Page 1 lists the loan term (e.g., 30 years), product type (fixed-rate or adjustable), and loan purpose. Verify that every field matches what you discussed with the lender — errors here can cascade through the rest of the form. Check that your name, property address, and purchase price are accurate.

Below that, the Loan Terms table shows your loan amount, interest rate, and projected monthly principal-and-interest payment. If the interest rate box notes that it can increase after closing, this is an adjustable-rate mortgage (ARM) — take note of the maximum possible rate shown.

Still on Page 1, the Projected Payments table breaks down your estimated monthly payment into principal and interest, mortgage insurance (if applicable), and estimated escrow (property taxes and homeowner's insurance). The total is labeled Estimated Total Monthly Payment.

Mortgage insurance typically applies when your down payment is less than 20%. For more on how down payment size affects your loan structure, see our explanation of loan-to-value ratio thresholds.

Page 2 is the most detailed — and most important — section for comparing lenders. It divides costs into two categories:

• Section A (Origination Charges): Fees charged directly by the lender — origination fees, underwriting fees, and any discount points you've agreed to pay to lower your rate. These are fixed; you cannot shop for a lower price elsewhere.
• Sections B–H (Other Costs): Third-party services such as appraisal, title insurance, recording fees, and prepaid items like homeowner's insurance and prepaid interest. Some of these you can shop for independently.

The bottom of Page 2 shows Closing Costs (the total) and Cash to Close — the full amount you'll need to bring on closing day, including your down payment.

Page 3 puts the loan's true long-term cost in plain numbers. The Comparisons table shows:

• APR (Annual Percentage Rate): The interest rate plus most lender fees, expressed as a yearly rate. This is a more complete cost measure than the interest rate alone.
• Total Interest Percentage (TIP): The total interest you'll pay over the life of the loan as a percentage of the loan amount. On a 30-year mortgage this number can be significant — it's meant to be a reality check, not a cause for alarm.
• In 5 Years: Total principal and interest paid, plus total principal paid down, in the first five years — useful for buyers who don't plan to stay long-term.

The final section of Page 3 discloses whether the lender may transfer (sell) your loan to another servicer after closing, whether they require an escrow account, and contact information for housing counselors. It also confirms whether the lender has accepted your application or still requires additional information.

If you're curious how fine-print disclosures function across different loan types, the same close-reading approach applies to auto financing — see our guide on what car loan fine print actually says.