How to Read a Loan Estimate

Within three days of applying, every lender must hand you the same three-page form. Once you can read it, lender marketing loses its power over you. Here is the full decode.

Page 1: the loan, in one view

• Loan terms: amount, rate, and whether each can increase after closing (for an ARM or balloon, the danger boxes are here).
• Projected payments: principal & interest plus estimated taxes/insurance/escrow — your real monthly outgo, in years 1+ and later periods if it changes.
• Costs at closing: the headline cash-to-close estimate.

Page 2: Sections A–J, where the truth lives

• A — Origination charges: the lender's own price (points live here). Cannot increase at closing.
• B — Services you cannot shop for: appraisal, credit report, flood cert. Capped at +10% total at closing.
• C — Services you can shop for: title, survey, attorney. If you use the lender's listed providers, the +10% cap applies; choose your own and these can vary.
• D — Total loan costs (A+B+C). This is the number to compare between lenders — with our comparison calculator.
• E — Taxes & government fees: recording and transfer taxes; capped at +10%.
• F — Prepaids: first-year insurance, daily interest, prepaid taxes. Not lender profit; varies with closing date.
• G — Initial escrow: the seed deposits for your escrow account (see the escrow guide).
• H — Other (e.g., owner's title policy) and I — Total other costs; J — Total closing costs, and the final cash-to-close math including credits and the down payment.

Page 3: comparisons that matter

The 'Comparisons' box shows total cost over the first 5 years, total interest percentage (TIP), and the APR — the three figures regulators designed for cross-lender comparison. Check the APR against our APR calculator. The page also names your loan officer's license (verify it in NMLS) and states whether the lender intends to service your loan.

Your legal protections

• Section A cannot increase. B, C (with listed providers) and E are capped at +10% in aggregate. Anything else changing needs a valid reason (a 'changed circumstance').
• The Closing Disclosure, delivered at least 3 business days before closing, must match within those tolerances — compare the two documents line by line.
• Rate locks, expiration dates and your right to shop are printed on the form; a lender who will not provide one in writing is telling you something.

Shopping method: collect 2–3 Loan Estimates the same day for the identical scenario, compare Section D + rate together (never rate alone), and price any points with the points calculator. More in how to compare lenders.