If you’ve ever felt overwhelmed by mortgage lingo, you’re not alone. The home loan process can come with a lot of unfamiliar terms, and we know how frustrating that can feel when all you want is to understand what’s going on. That’s why we put together this list of common mortgage terms every homeowner should know to help you feel more confident and informed throughout your homebuying journey. 

At Edge Mortgage, Inc., we believe knowledge is power, and we’ll always take the time to explain everything in plain English. But just in case you want to refer back, here’s a helpful guide you can keep in your back pocket.

If you want to download the common mortgage terms, you can do that too. We’ve made a common mortgage terms printable to make things easier for you.

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Common Mortgage Terms Every Homeowner Should Know

1. Application and Loan Process Terms

These are the terms you’ll likely hear right from the beginning:

  • 1003 – The standard mortgage application form used by lenders to collect your information.
  • AE (Account Executive) – The contact between your mortgage broker and the lender.
  • LO (Loan Officer) – The licensed professional (that’s us!) guiding you through your mortgage from start to finish.
  • LOE (Letter of Explanation) – A brief note from you explaining something in your file, like a job gap or large deposit.
  • LOS (Loan Origination System) – The software used by lenders to process and track your loan.
  • DU (Desktop Underwriter) – Fannie Mae’s automated system that helps assess risk.
  • LPA (Loan Product Advisor) – Freddie Mac’s version of an automated underwriting system.
  • AUS (Automated Underwriting System) – Technology used to evaluate your application and determine your eligibility.

2. Mortgage Types and Loan Programs

It’s important to know the type of loan that works best for your situation:

  • ARM (Adjustable Rate Mortgage) – A mortgage with a rate that may go up or down over time.
  • IRRRL (Interest Rate Reduction Refinance Loan) – A streamlined VA refinance option to lower your rate.
  • R/T (Rate and Term Refinance) – A refinance to change your interest rate or loan term—without taking cash out.
  • C/O (Cash-Out Refinance) – Replacing your loan and borrowing extra funds from your home’s equity.
  • HELOC (Home Equity Line of Credit) – A revolving line of credit that lets you borrow from your home equity.
  • QM (Qualified Mortgage) – A type of loan designed to be affordable and safe for the borrower.

3. Insurance and Mortgage Protections

These terms involve protecting you and the lender:

  • MI (Mortgage Insurance) – Required if you put less than 20% down on a conventional loan, or on all FHA and USDA loans.
  • BPMI (Borrower Paid Mortgage Insurance) – Mortgage insurance paid monthly by the borrower.
  • LPMI (Lender Paid Mortgage Insurance) – The lender pays the insurance, usually with a slightly higher interest rate.
  • UFMIP (Upfront Mortgage Insurance Premium) – A one-time premium paid upfront on FHA and USDA loans.
  • HOI (Homeowners Insurance) – Insurance to protect your home from damage, theft, or loss.
  • EOI (Evidence of Insurance) – Proof of insurance coverage—required before closing.

4. Credit and Financial Terms

These help determine what kind of loan you qualify for:

  • FICO – Your credit score, used to evaluate your creditworthiness.
  • DTI (Debt-to-Income Ratio) – The percentage of your income that goes toward debt payments.
  • VOE (Verification of Employment) – Confirms that you’re currently employed.
  • VOI (Verification of Income) – Confirms how much money you earn.
  • VOM (Verification of Mortgage) – A record of your past or current mortgage payments.

5. Appraisal, Title and Closing

These are common terms you’ll hear as you approach the finish line:

  • AMC (Appraisal Management Company) – Coordinates appraisals between lenders and appraisers.
  • COC (Change of Circumstance) – A change in your file that requires updated loan disclosures.
  • CD (Closing Disclosure) – A detailed breakdown of your final loan costs, provided before closing.
  • LE (Loan Estimate) – A document that outlines estimated loan terms, payments, and closing costs.
  • POC (Paid Outside Closing) – Fees (like for an appraisal) that are paid before closing day.
  • CTC (Clear to Close) – The official “green light” that your loan is ready for closing.

6. Loan Structure and Payments

These terms relate to how your loan and payments are calculated:

  • LTV (Loan to Value) – The percentage of the home’s value you’re borrowing.
  • CLTV (Combined Loan to Value) – The total of all loans secured by the property divided by its value.
  • P&I (Principal and Interest) – The core of your monthly mortgage payment.
  • PITI (Principal, Interest, Taxes, Insurance) – The full monthly payment, including escrowed taxes and insurance.

7. Mortgage Market Players

It helps to know the big names behind the scenes:

  • FNMA (Fannie Mae) – A government-sponsored enterprise that buys and guarantees mortgages.
  • FMCC (Freddie Mac) – Another government-sponsored enterprise that supports the mortgage market.
  • HOA (Homeowners Association) – A group that manages shared spaces and enforces community rules.

8. Other Helpful Terms

Just a few more you might hear:

  • HPML (High-Priced Mortgage Loan) – A loan with an interest rate above a certain threshold.
  • TIL (Truth in Lending) – A form that explains the true cost of borrowing money, including interest.

We know, this is a lot. But here’s the good news. You don’t need to memorize any of it. At Edge Mortgage, Inc., we’re here to walk you through the process, answer every question, and explain everything in a way that actually makes sense. Buying a home is a big decision, but it doesn’t have to be overwhelming. Whenever you’re ready to explore your options or need a deeper explanation of any term, our team is here to provide straightforward guidance and personalized support. Contact us today to get started!

We have more than 60 5-star reviews that show our excellence and dedication to our clients 

“Working with Keri at Edge Mortgage was hands down the easiest, best refinance we ever did. Not only did we get an excellent rate since she shops around for the best, the time from application to close was super fast! Keri strives for competitive closing costs and she works to communicate and educate. Keri and Edge Mortgage truly put client needs first, and I especially love her servant heart and that Edge Mortgage will give back, supporting a charity of choice on behalf of her clients. I highly recommend Keri for any and all of your mortgage needs. Thank you so much to Keri and Edge Mortgage!” -Brechen

“For my most recent home purchase, I worked with Keri at Edge Mortgage. Like most home sales, I was faced with a quick turnaround to get qualified in order to get an offer in. Keri was exceptional to work with, and it was like I was her only customer. I would highly recommend Edge Mortgage and Keri.” -Sean

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Edge Mortgage Inc. is located in Johnstown, Colorado, and is proud to serve the states of Colorado, Nebraska, Ohio, and Wyoming with all their mortgage and home loan needs. We offer honest answers and a stress-free process, and we have no hidden or extra fees, keeping more money in your pocket. Edge Mortgage, Inc. is your trusted mortgage broker, and we care as much as you do about getting the best loan for your unique circumstances. We are here and are ready to serve you. Call us today at 970-744-0000.

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