The short version: a Loan Estimate is a three-page form. Page 1 is the summary (loan amount, rate, monthly payment, cash to close). Page 2 lists every cost in sections A to J. Page 3 lets you compare offers. Get one from each lender you are considering, and compare the numbers the lender controls: the interest rate, the points, the origination charges, and any lender credits.
What a Loan Estimate is, and what it is not
A Loan Estimate tells you the important details of a mortgage you asked about, in the same layout from every lender. That is the point of it: you can put two or three side by side. It is not an approval. The Consumer Financial Protection Bureau (CFPB) is clear that when you receive one, the lender has not yet approved or denied your loan, and asking for one does not commit you to that lender.
Lenders must send a Loan Estimate within three business days after you give them six pieces of information: your name, income and Social Security number, the address of the home, an estimate of its value, and the loan amount. You do not need a signed purchase agreement. By law, the only fee a lender may charge before issuing a Loan Estimate is a small fee for pulling your credit report.
Page 1: the summary
Page 1 is where you check that the loan is the one you asked for. Look at these items in order:
- Name, loan term, purpose, product and loan type. A misspelled name or a wrong address can hold up your loan later, so fix them now.
- Loan amount, interest rate and monthly principal and interest. Check whether the rate is fixed or adjustable. If it is adjustable, look at the worst case if rates rise.
- Rate lock. Check whether your rate is locked and until when. If it is not locked, the CFPB warns it can change at any time.
- Risky features. Under Loan Terms, see whether the loan amount, the rate or the payment can increase after closing, and whether there is a prepayment penalty or a balloon payment. If the answer is yes, ask why, and ask for a Loan Estimate for a loan without the feature so you can see the difference.
- Projected payments and estimated total monthly payment. This adds mortgage insurance (if any) and the taxes and insurance the lender will collect in escrow. Check whether taxes, insurance or HOA dues are not escrowed, because you would pay those yourself.
- Estimated closing costs and estimated cash to close. Cash to close includes your down payment. Make sure you have that much available.
Page 2: closing costs, section by section
Page 2 breaks the costs into lettered sections. The example below uses a $400,000 home with $80,000 down, and the amounts are illustrations computed with the same formulas as our closing cost calculator. Your form will show your own amounts.
| Section | What it contains | Example | What to do with it |
|---|---|---|---|
| A | Origination charges: the lender's own fees, including any points | $3,200 | Compare between lenders |
| B | Services you cannot shop for: services the lender requires and picks, such as the appraisal and credit report | $700 | Compare between lenders |
| C | Services you can shop for, such as title services | $2,500 | Shop around for these |
| D | Total loan costs (A + B + C) | $6,400 | A quick total to compare |
| E | Taxes and other government fees, such as recording fees and transfer taxes | $150 | Should be similar between lenders |
| F | Prepaids: homeowner's insurance, property taxes and interest paid in advance | $3,388 | Should be similar between lenders |
| G | Initial escrow payment at closing: the starting balance of your tax and insurance account | $1,033 | Should be similar between lenders |
| H | Other costs, such as an owner's title policy or HOA fees | $0 | Ask what each one is |
| I | Total other costs (E + F + G + H) | $4,571 | These are not the lender's fees |
| J | Total closing costs (D + I), reduced by any lender credits | $10,971 | See the cash to close below |
Below section J the form calculates the estimated cash to close: your down payment plus the closing costs, less any deposit you have already paid, seller credit or lender credit. In this example the total closing cost is $10,971, which is 2.7% of the price. The CFPB says closing costs typically run 2% to 5%.
Points and lender credits. Points are an upfront fee to buy a lower interest rate. One point is 1% of the loan. A lender credit works the other way: the lender pays part of your closing costs, usually in return for a higher rate. Both appear on page 2, and both change which offer is cheapest. Our loan offer comparison calculator shows how.
Which lines to compare between lenders
The CFPB advises focusing on the costs that vary by lender: the origination charges in Section A, the services in Section B, and lender credits. Lenders do not control your taxes and insurance, so a Loan Estimate with lower taxes or insurance is not a better deal. If sections E, F and G are very different between offers, ask why. Also make sure each offer is for the same kind of loan and was issued around the same day, because rates change daily.
Page 3: comparisons and other considerations
- In 5 years: the total you will have paid, and the principal you will have paid off. Subtract the second from the first to get your five-year cost of borrowing. The CFPB notes that borrowers keep a mortgage about five years on average.
- APR (annual percentage rate): the yearly cost of the loan expressed as a rate, including some fees. It is useful for comparing, but it assumes you keep the loan for the whole term.
- TIP (total interest percentage): the total interest you would pay over the whole loan, as a share of the loan amount.
- Other considerations: the late payment charge, whether the loan can be assumed by a buyer, whether the lender may transfer your loan to another servicer, and what an appraisal is for.
Which costs can change before closing
It is illegal for a lender to deliberately underestimate costs, but some costs are allowed to change. The CFPB groups them in three categories:
| Can it go up? | Which costs |
|---|---|
| No, not at all | Fees paid to the lender, mortgage broker or their affiliates for a required service. Fees for required services you were not allowed to shop for, when the provider is not affiliated with the lender. Transfer taxes. |
| Up to 10% in total | Recording fees, and fees for required services when you chose a provider from the lender's written list. |
| By any amount | Prepaid interest, property insurance premiums and initial escrow deposits. Fees for required services that you shopped for yourself and chose a provider not on the lender's list. Third-party services the lender does not require. |
These limits do not apply if there is a "change in circumstances", for example if you switch to a different type of loan or change your down payment, the appraisal comes in higher or lower than expected, your credit changes, or the lender cannot document some of your income. In that case you will usually get a revised Loan Estimate. If costs rose more than allowed with no change in circumstances, you are entitled to a refund of the excess. Your interest rate can also change if it is not locked, or if you do not close within the lock period.
Loan Estimate versus Closing Disclosure
| Loan Estimate | Closing Disclosure | |
|---|---|---|
| When | Within three business days of applying | At least three business days before your scheduled closing |
| Purpose | Shows what to expect, so you can compare lenders | Shows the final terms and costs, so you can check them before you sign |
| What to do | Compare it with other lenders' estimates and negotiate | Compare it line by line with your most recent Loan Estimate, and ask about any difference |
Use the three days wisely, because that is the time to resolve problems. Do not sign anything with blank spaces.
A ten-minute review
- Confirm the loan amount, term, rate type and whether the rate is locked.
- Look for a prepayment penalty, a balloon payment or an increasing payment.
- Compare the total monthly payment with your budget, including anything not escrowed.
- Compare Sections A and B and any lender credits with the other offers.
- Look at the "In 5 years" figures on page 3.
- Check that cash to close is money you have.
- Ask about every line you do not recognize, especially in Section H.
Run the numbers
Enter the rate, term, points, fees and credits from two or three Loan Estimates into the loan offer comparison calculator to see which costs least for the years you expect to keep the loan. Estimate your own cash to close with the closing cost calculator, and see the full sequence of steps in the first-time home buyer guide. Prepare your questions with questions to ask a mortgage lender.
Sources
This guide follows the Consumer Financial Protection Bureau's Loan Estimate explainer, Compare and negotiate your loan offers, Request and review multiple Loan Estimates, Closing Disclosure explainer and Can my final mortgage costs increase from what was on my Loan Estimate? Rules and forms can change, so check the CFPB pages for the latest. Last reviewed September 2026. This is general information, not legal or financial advice.