Mortgage Glossary
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Mortgage Glossary
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GLOSSARY TERMS A–Z
The mortgage industry runs on acronyms and jargon that lenders rarely explain. This glossary defines the most important terms — in plain language, linked to the programs they apply to.
APR (Annual Percentage Rate)
The total annual cost of borrowing expressed as a percentage — includes the interest rate plus origination fees, discount points, and mortgage insurance. APR is always higher than the stated interest rate and is the more accurate comparison metric when evaluating loan offers from different lenders.
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that starts fixed for an initial period (typically 5, 7, or 10 years) then adjusts annually based on a market index. A 7/1 ARM is fixed for 7 years, then adjusts every 1 year. Often used when a borrower plans to sell or refinance before the adjustment period begins.
Amortization
The process of paying off a loan through regular payments over time. Each payment covers both interest and principal. In early years, most of the payment is interest. In later years, most is principal. A 30-year amortization schedule shows every payment from month 1 to month 360.
Appraisal
An independent assessment of a property’s current market value conducted by a licensed appraiser. Required by most lenders before closing. VA appraisals include Minimum Property Requirements (MPR) — additional standards that the home must meet.
ARV (After Repair Value)
The estimated market value of a property after renovation is complete. Used to underwrite fix-and-flip loans — lenders typically advance 85–90% of total project cost (purchase + renovation) based on ARV.
Bank Statement Loan
A Non-QM mortgage that uses 12 or 24 months of bank deposit history instead of W2s or tax returns to qualify the borrower. Personal deposits typically count at 100%. Business deposits apply a 50% expense factor. The program was specifically designed for self-employed borrowers whose tax write-offs reduce their taxable income below conventional qualification thresholds.
Bridge Loan
Short-term financing that allows a homeowner to purchase a new property before selling their current one. The bridge loan uses equity from the existing home as collateral. Typically 6–12 months in duration. Eliminates the stress of needing to sell before buying in competitive markets.
Clear to Close (CTC)
The final underwriting approval indicating that all conditions have been satisfied and the loan is ready to close. Receiving a CTC means the lender has verified all documents, the appraisal has cleared, and title is clean. Closing is typically scheduled within 2–5 business days after CTC.
Closing Costs
Fees and prepaid expenses paid at closing. Typically 2–5% of the loan amount. Includes: origination fee, title insurance, appraisal, prepaid property taxes, homeowner’s insurance, and attorney fees. VA loans limit what veterans can be charged. Sellers can contribute to closing costs through negotiation.
COE (Certificate of Eligibility)
The VA document confirming a veteran or service member’s eligibility for a VA home loan. Access Financial requests the COE directly from the VA’s Web LGY system at no charge — typically returned same day.
Conforming Loan
A mortgage that meets Fannie Mae and Freddie Mac guidelines — including loan limits. The 2026 standard conforming limit is $806,500. High-cost areas (NOVA, DC metro, most of California) have limits up to $1,209,750. Loans above the applicable county limit are jumbo loans.
Bank Statement Loan
A Non-QM mortgage that uses 12 or 24 months of bank deposit history instead of W2s or tax returns to qualify the borrower. Personal deposits typically count at 100%. Business deposits apply a 50% expense factor. The program was specifically designed for self-employed borrowers whose tax write-offs reduce their taxable income below conventional qualification thresholds.
Bridge Loan
Short-term financing that allows a homeowner to purchase a new property before selling their current one. The bridge loan uses equity from the existing home as collateral. Typically 6–12 months in duration. Eliminates the stress of needing to sell before buying in competitive markets.
Quick answers
Standard purchase loans close in 30–45 days from application. FHA Streamline and VA IRRRL refinances close in 21 days. DSCR investor loans close in 14–21 days. The biggest variables are appraisal scheduling and document turnaround. Access Financial orders appraisals immediately on contract and tracks them daily. Pre-approval: 24 hours. Keys: 30 days average on purchase loans.
For W2 borrowers: 2 months pay stubs, 2 years W2s, 2–3 months bank statements, government ID, and the property address (if under contract). For self-employed: 12–24 months bank statements or a CPA-prepared P&L statement. For VA loans: Certificate of Eligibility (we pull this for you). For ITIN loans: Individual Taxpayer ID + alternative credit documentation. No documents are required at the inquiry stage — only if you proceed to a full application.
A full pre-approval requires a hard credit pull, which typically reduces your score by 2–5 points temporarily. Scores recover within 90 days for most borrowers. Multiple mortgage inquiries within a 14–45 day window are typically treated as a single inquiry by FICO — so shopping multiple lenders in a short window has minimal credit impact. The initial inquiry at the information-gathering stage does not require a credit pull.