Glossary
Mortgage and investor terms in plain language.
- 1003
- The Uniform Residential Loan Application. It is the standard form where you list your income, assets, debts, and the property.
- Amortization
- How your loan gets paid down over time. Early payments are mostly interest, later ones are mostly principal.
- Appraisal
- A professional estimate of what a property is worth. Many investor deals skip it, but most home purchase loans need one.
- APR
- Annual Percentage Rate. It folds certain loan costs into one yearly figure so you can compare loans more fairly.
- ARM
- Adjustable-Rate Mortgage. The rate stays put for an initial period, then can change on a schedule.
- ARV
- After-Repair Value. What the property should be worth once the renovation is done.
- Bridge loan
- Short-term financing that lets you buy before you sell, or pull equity out of a property for a while.
- BRRRR
- Buy, Rehab, Rent, Refinance, Repeat. We fund the acquisition, then refinance into a DSCR loan on the back end.
- Cash to close
- The total money you bring to the closing table: down payment plus closing costs, minus credits.
- Closing costs
- Fees to finish the deal, like lender fees, title, and prepaid items. They are separate from your down payment.
- Conventional loan
- A mortgage not backed by a government agency. Down payments start at 3%.
- DPA (Down Payment Assistance)
- Help with your down payment or closing costs, up to 5% of the price. It comes as a forgivable second, a repayable second, or closing-cost assistance.
- Draw schedule
- The plan for releasing rehab or construction funds in stages as work gets completed.
- DSCR
- Debt Service Coverage Ratio. It checks whether a property's rent covers its loan payment, so you qualify on the property, not your paycheck.
- DTI
- Debt-to-Income ratio. Your monthly debts divided by your monthly income. Lenders use it to see what you can afford.
- Earnest money
- A deposit you put down when your offer is accepted to show you are serious. It usually counts toward your cash to close.
- Escrow
- Two meanings: a neutral third party holding funds during the sale, and an account where your lender collects taxes and insurance with your monthly payment.
- FHA loan
- A government-insured mortgage with 3.5% down and flexible credit guidelines. It carries mortgage insurance.
- Fixed-rate mortgage
- A loan where the interest rate never changes, so your principal and interest payment stays the same.
- Forgivable second
- A second loan for down payment help that is forgiven over time, 5 years in our program, if you stay in the home.
- Hard money
- Short-term, asset-based financing from private lenders. Speed matters more than perfect paperwork.
- HELOC
- Home Equity Line of Credit. A revolving line secured by your home that you draw from as needed.
- ITIN
- Individual Taxpayer Identification Number, issued by the IRS to people who file taxes without a Social Security number.
- Jumbo loan
- A mortgage above standard conforming loan limits. It has its own guidelines.
- LLC
- Limited Liability Company. A business entity many investors use to hold property and keep it separate from personal assets.
- Loan-to-cost (LTC)
- The loan amount compared to the total project cost, purchase plus rehab. Lenders use it on flips and construction.
- LTV
- Loan-to-Value. The loan amount divided by the property value. An 80% LTV means roughly 20% down.
- MIP / PMI
- Mortgage insurance that protects the lender when you put less than 20% down. MIP is for FHA loans, PMI is for conventional.
- Points
- Fees paid at closing, where one point equals 1% of the loan amount. Sometimes paid to lower the rate.
- Pre-approval vs. pre-qualification
- Pre-qualification is a quick estimate from what you tell us. Pre-approval means we verified your documents, so it carries real weight with sellers.
- Rate lock
- A promise from the lender to hold your rate for a set period while your loan closes.
- Rehab budget
- The line-by-line cost of the renovation, including a cushion for surprises. Houses love surprises.
- Scope of work
- A written list of exactly what will be repaired or built, by room or trade. It backs up your rehab budget.
- Seasoning
- How long a borrower has owned a property or held funds in an account. Some programs require a minimum time.
- Seller concessions
- Money the seller agrees to put toward your closing costs. It is negotiated in the contract and has limits.
- Title insurance
- Insurance that protects against ownership problems from the past, like liens or errors in public records.
- Underwriting
- The review where an underwriter checks your income, assets, credit, and the property before final approval.
- USDA loan
- A 0% down government-backed loan for homes in eligible rural and suburban areas.
- VA funding fee
- A one-time fee on VA loans that helps fund the program. VA loans have no monthly mortgage insurance.
- W-2 vs. 1099
- A W-2 means you are an employee with taxes withheld. A 1099 means you are an independent contractor, which changes how income is documented.
