Loan Estimate Walkthrough
The 3-page form that lets you compare any two lenders apples to apples. Read it like an inspector.
The Loan Estimate is the most important document in your purchase. It is a standardized 3-page form that every lender must deliver within 3 business days of a complete application. Same fields, same order, same definitions. That is what makes apples-to-apples comparison possible.
If you only learn one document, learn this one. Get three. Stack them. Compare line by line.
Page 1. Loan terms and projected payments
Top left: loan amount, interest rate, monthly P+I. Below that: prepayment penalty (almost always No), balloon payment (almost always No), and whether the rate or payment can change.
Projected payments box shows monthly P+I plus mortgage insurance plus estimated escrow. The number at the bottom of this box is what your monthly bill will look like in year one. It will not be exactly right because tax and insurance estimates are early, but it should be within 5 percent of reality.
Costs at closing box: estimated closing costs and estimated cash to close. Cash to close = down payment + closing costs - lender credits - seller credits + adjustments. This is the wire amount.
Page 2. The itemized cost detail
This is where you read line by line. Section A through F all itemized. The total at the bottom of Section A through C is your loan costs. The total at the bottom of E plus F is other costs. Sum is your total closing costs (matches page 1).
Most negotiation lives here. Most padding lives here too. Read every line. Ask about every line you do not recognize.
Page 3. Comparisons, other considerations, contact info
Comparisons box: 5-year total cost, 5-year principal paid, APR, total interest percentage. APR includes some closing costs in the rate calculation, which is why APR is higher than the note rate. Useful for comparing two LEs from the same lender on the same loan, less useful across lenders because of fee inclusion differences.
Other considerations: assumability, demand feature, late payment policy, refinance, servicing. Skim. Sign at the bottom only if you understand it.
What can change before closing
Section A lender fees: zero tolerance. They cannot increase at all between LE and Closing Disclosure.
Section B and Section C with lender-recommended providers: 10 percent aggregate tolerance. The total can move up to 10 percent.
Section C if you shopped your own provider, plus prepaids and escrow: no tolerance. These can move based on actual third-party pricing and timing.
If a fee moves outside its tolerance, the lender owes you the difference at closing. If you see a Section A number move, that is a violation. Push back hard.
Frequently asked
No. A quote is informal and not regulated. A Loan Estimate is a federal disclosure delivered after a complete application. The Loan Estimate is binding within tolerances. A quote is not.
Each lender will pull your credit, but multiple mortgage inquiries inside a 14-day window count as a single inquiry for credit scoring. So getting three Loan Estimates within two weeks costs you the same on credit as getting one.
The interest rate quoted on a Loan Estimate is good for 10 business days unless you formally lock. Other estimated costs are good as long as the loan structure and property do not change.