Principal and interest
Principal is the amount borrowed. Interest is the cost of borrowing it. Your payment may also include taxes, insurance, and other costs.
Annual percentage rate (APR)
APR includes the interest rate and certain loan costs, expressed as an annual percentage. Compare APR alongside the rate, fees, and loan structure.
Closing costs
Costs associated with completing a mortgage, which may include lender charges, title services, appraisal, and prepaid expenses. They are separate from the down payment.
Escrow
An account a lender may use to collect and pay property taxes and insurance. An escrow payment can change as those costs change.
Private mortgage insurance (PMI)
Insurance that protects the lender, not the borrower, on certain conventional loans. It may apply when your down payment is smaller and may be removable under applicable rules.
Debt-to-income ratio (DTI)
Monthly qualifying debt payments divided by gross monthly income. It is one factor in qualification, not a complete picture of what you can comfortably afford.
Preapproval and underwriting
Preapproval is an initial conditional review. Underwriting is the more detailed evaluation of the borrower, property, and loan before final approval.
General educational information, not individualized financial or legal advice. Loan eligibility, documentation, and requirements vary.