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A
Adjustable-Rate Mortgage (ARM)A mortgage where the interest rate changes periodically based on a market index, after an initial fixed period.
AmortizationThe process of paying off a loan over time through scheduled principal and interest payments.
APR (Annual Percentage Rate)The yearly cost of a loan including interest and certain fees, expressed as a percentage.
AppraisalA licensed professional's estimate of a property's market value, used by lenders to confirm collateral value.
Asset Utilization LoanA Non-QM program that qualifies a borrower using liquid assets instead of employment income.
Assumable MortgageA mortgage that allows a buyer to take over the seller's existing loan, including its rate and terms.
B
Bank Statement LoanA Non-QM program that uses 12–24 months of bank statements to establish income instead of tax returns.
Bridge LoanShort-term financing used to "bridge" the gap between buying a new property and selling an existing one.
BrokerA licensed intermediary who originates loans on behalf of multiple lenders. AmeriFirst Capital is a direct retail lender, not a broker.
BuydownPrepaying interest upfront to secure a lower rate, either temporarily or for the life of the loan.
C
Cap RateCapitalization rate — a property's net operating income divided by its value, used to evaluate investment returns.
Cash-Out RefinanceRefinancing for more than the current loan balance and taking the difference in cash.
Closing CostsFees paid at closing for services like appraisal, title, underwriting and recording.
Closing DisclosureA federally required form detailing final loan terms and costs, provided at least three days before closing.
Conforming LoanA conventional loan that meets Fannie Mae / Freddie Mac guidelines and loan limits.
Conventional LoanA mortgage not backed by a government agency, typically following Fannie Mae or Freddie Mac guidelines.
Credit ScoreA numeric representation of creditworthiness, used by lenders to assess risk and set pricing.
D
DSCR (Debt Service Coverage Ratio)Monthly rental income divided by monthly PITIA — the core qualifying metric for investor DSCR loans.
Debt-to-Income Ratio (DTI)Total monthly debt payments divided by gross monthly income, used to qualify borrowers on income-based programs.
Deed of TrustA legal document securing a loan against real property, used in place of a mortgage in many states including California.
Discount PointsOptional upfront fees paid to reduce the interest rate on a loan.
Down PaymentThe portion of the purchase price paid upfront, not financed by the loan.
E
Earnest MoneyA deposit made to demonstrate good faith when submitting an offer on a property.
Equal Housing LenderA designation indicating a lender complies with fair lending laws prohibiting discrimination.
EquityThe difference between a property's market value and the outstanding loan balance.
EscrowA neutral third-party account holding funds or documents until closing conditions are met, or holding funds for taxes and insurance.
F
FHA LoanA government-backed loan insured by the Federal Housing Administration, with lower down payment and credit requirements.
Fixed-Rate MortgageA mortgage with an interest rate that stays the same for the entire loan term.
Foreign National LoanA program for non-US-resident borrowers financing US property without a US credit history.
Funding FeeA one-time fee on VA loans that helps offset the cost of the loan guaranty to taxpayers.
G
Gift FundsDown payment or closing cost funds gifted by a relative or approved source, typically requiring a gift letter.
Good Faith EstimateA historical disclosure of estimated loan costs, largely replaced today by the Loan Estimate.
H
Hard Money LoanShort-term, asset-based financing typically used by investors for quick purchases or renovations, usually at higher rates.
Hazard InsuranceInsurance covering damage to a property from fire, storms and other covered hazards; required by lenders.
HELOC (Home Equity Line of Credit)A revolving line of credit secured by home equity, drawn as needed.
HOA (Homeowners Association)An organization that manages a shared community and collects dues, factored into qualifying payment calculations.
I
Impound AccountAn account, managed by the lender, that collects and pays property taxes and insurance on the borrower's behalf.
Interest RateThe cost of borrowing, expressed as a percentage of the loan amount.
ITIN LoanA loan available to borrowers who file taxes with an Individual Taxpayer Identification Number instead of a Social Security number.
J
Jumbo LoanA mortgage exceeding conforming loan limits, typically requiring stronger credit and reserves.
L
Lender CreditA credit from the lender toward closing costs, usually in exchange for a slightly higher rate.
Loan EstimateA standardized form disclosing estimated rate, payment and closing costs within three days of application.
Loan-to-Value Ratio (LTV)The loan amount divided by the property's appraised value or purchase price, expressed as a percentage.
Lock (Rate Lock)An agreement guaranteeing a specific interest rate for a set period while the loan is processed.
M
MLO (Mortgage Loan Originator)An individually licensed professional who takes applications and offers loan terms to borrowers.
Mortgage InsuranceInsurance that protects the lender if a borrower defaults, typically required above certain LTV thresholds.
Mortgage NoteThe legal document in which a borrower promises to repay the loan under specified terms.
N
NMLSThe Nationwide Multistate Licensing System, which registers and tracks licensed mortgage companies and loan officers.
Non-QM Loan (Non-Qualified Mortgage)A loan that doesn't meet strict "Qualified Mortgage" underwriting rules, allowing alternative documentation like bank statements or DSCR.
O
Occupancy TypeHow a property will be used — primary residence, second home, or investment — which affects loan pricing and terms.
Origination FeeA fee charged by the lender for processing a new loan application.
Owner-OccupiedA property used as the borrower's primary residence, as opposed to a rental or investment property.
P
P&L StatementProfit & Loss statement — a CPA-signed summary of business income and expenses, used to qualify P&L-only borrowers.
PITIAPrincipal, Interest, Taxes, Insurance and Association dues — the full qualifying monthly housing payment.
PointsSee Discount Points — upfront fees paid to reduce a loan's interest rate.
Pre-ApprovalA lender's conditional commitment based on verified documentation, stronger than a prequalification.
Prepayment PenaltyA fee charged for paying off a loan early; common on some DSCR programs, disclosed upfront.
PrequalificationAn informal, early estimate of what a borrower may qualify for, based on self-reported information.
Private Mortgage Insurance (PMI)Insurance required on conventional loans above 80% LTV, protecting the lender against default.
Q
Qualified Mortgage (QM)A loan category meeting specific federal underwriting standards intended to ensure a borrower's ability to repay.
R
Rate LockSee Lock — an agreement guaranteeing a rate for a defined period.
RefinanceReplacing an existing mortgage with a new one, often to secure a better rate, term or cash out equity.
Renovation LoanA loan that finances both the purchase (or refinance) and renovation of a property in a single closing.
Reverse MortgageA loan for homeowners 62+ that converts home equity into cash flow without requiring monthly payments.
S
SeasoningThe required length of time funds, assets or a prior loan must "age" before they can be used to qualify.
Second MortgageA subordinate loan secured by the same property as an existing first mortgage.
ServicerThe company that collects payments and manages a loan after closing, which may differ from the original lender.
Short-Term RentalA property rented on a nightly or weekly basis; income treatment varies by DSCR program.
T
1099 IncomeNon-employee compensation reported on IRS Form 1099, used to qualify contractors and commissioned earners.
Term (Loan Term)The length of time over which a loan is scheduled to be repaid, commonly 15 or 30 years.
Title InsuranceInsurance protecting against defects in a property's ownership history or claims against the title.
U
UnderwritingThe process of evaluating a borrower's file against program guidelines to make a final lending decision.
USDA LoanA zero-down loan program for eligible rural and suburban properties, backed by the US Department of Agriculture.
V
VA LoanA zero-down loan program for eligible veterans, active-duty service members and surviving spouses.
Verification of Employment (VOE)A document confirming a borrower's employment status and income, used on traditional income-documentation loans.
W
W-2 IncomeWage income reported on IRS Form W-2, the standard documentation for traditionally employed borrowers.
