{"id":85895,"date":"2026-01-28T14:33:58","date_gmt":"2026-01-28T22:33:58","guid":{"rendered":"https:\/\/www.redfin.com\/blog\/?p=85895"},"modified":"2026-02-06T10:41:27","modified_gmt":"2026-02-06T18:41:27","slug":"how-to-read-loan-estimate","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/blog\/how-to-read-loan-estimate\/","title":{"rendered":"How to Read a Loan Estimate (Good Faith Estimate) and Compare Across Lenders"},"content":{"rendered":"

Whether you’re a <\/span>first-time homebuyer<\/span><\/a> or have several home transactions under your belt, it helps to start the <\/span>home-buying journey<\/span><\/a> with accurate information so you can make informed decisions. <\/span>A mortgage<\/span><\/a>\u00a0is often the largest and most expensive loan you’ll apply for in your lifetime. The more you know about the lending process, the easier it will be to select the right loan for your situation.\u00a0<\/span><\/p>\n

There\u2019s one key document you\u2019ll want to gain a solid understanding of when you’re <\/span>shopping for a mortgage<\/span><\/a>: the loan estimate (LE), also known as a \u201cgood faith estimate.\u201d This guide will walk you through each page of the loan estimate, so you\u2019re prepared when shopping for a home loan.\u00a0<\/span><\/p>\n

\"Row<\/p>\n

What is a loan estimate or a \u201cgood faith estimate\u201d?\u00a0<\/span><\/h2>\n

When you apply for a mortgage, your lender is obligated to provide a Loan Estimate, a standardized form that includes essential details like your estimated interest rate, monthly payment, closing costs, and more. Getting a Loan Estimate doesn\u2019t mean you\u2019ve been approved or that you must proceed with a particular loan, it\u2019s simply a form to help you understand all the information before you move forward in the process.<\/span><\/p>\n

Which set of items appears on a loan estimate?<\/span><\/h2>\n

The loan estimate is three pages long, split into sections that outline the terms, closing costs, and fees associated with your loan.\u00a0<\/span><\/p>\n

How to read a loan estimate and compare it across lenders<\/span><\/h2>\n

All lenders must use a standard three-page document to provide a loan estimate, so the borrower can compare loan specifics to find the best deal. Every line on the loan estimate is important, so make sure to review the entire form carefully to correct any mistakes.<\/span><\/p>\n

While it\u2019s important to understand all the terms on your good faith estimate, there are a few key sections you\u2019ll want to pay extra special attention to. We walk through these sections below.<\/span><\/p>\n

\"Living<\/p>\n

Page one<\/span><\/h2>\n

Page one of the loan estimate is an overview of the mortgage loan terms and costs. Be sure to review each section carefully.<\/span><\/p>\n

The spelling of your name:<\/b> In the first left column, you’ll see your name and contact details. Review this information carefully for any errors. While this may seem insignificant, the wrong initial or a letter out of place can create complications later in the loan underwriting process.<\/span><\/p>\n

The date issued:<\/b> The good faith estimate is only good for ten days after this date. We recommend getting all of your estimates on the same day to compare across lenders as interest rates change daily.<\/span><\/p>\n

The loan term, purpose, product, and loan type:<\/b> The first right-hand column specifies the loan terms you’re considering and that you’ve discussed with your lender. For example, it will specify a 30-year fix-rate conventional, FHA<\/a>, VA mortgage<\/a>, or another mortgag<\/span>e type<\/span>. Verify the loan terms are accurate and align your intentions.\u00a0<\/span><\/p>\n

Is the interest rate locked?:<\/b> This will be marked \u201cYes\u201d or \u201cNo.\u201d If it\u2019s marked yes, the lender will provide an expiration date, after which the rate will reset if you have not applied for a mortgage by that time.\u00a0<\/span><\/p>\n

Loan amount:<\/b> The next left-hand column specifies the loan amount listed. Check that this amount is correct, as the remaining numbers in the estimate will hinge on that amount.\u00a0<\/span><\/p>\n

A fixed-rate or adjustable-rate mortgage:<\/b> You\u2019ll find this information in the upper-right column. Look for a heading that asks, “Can this amount increase after closing?” The column below this question should have “No” listed in each section if you are looking at a fixed-rate loan or “Yes” listed if you are looking at an adjustable-rate loan. Be sure your loan estimate shows the type of <\/span>mortgage rate<\/span><\/a> you were expecting.<\/span><\/p>\n

Interest rate: <\/b>The interest rate will be the current market interest rate offered for your loan type. This is not a rate based on your financial profile. Your actual rate could potentially be higher.<\/span><\/p>\n

Monthly payments: <\/b>The lender will give you an estimated <\/span>monthly mortgage payment<\/span><\/a> based on the loan amount and the interest rate.\u00a0<\/span><\/p>\n

Prepayment penalties: <\/b>This section will show a \u201cYes\u201d or a \u201cNo\u201d whether or not you have prepayment penalties on your loan. If \u201cYes,\u201d there will be a sentence to explain any prepayment penalty. Clarify with your lender what this means if you are unsure how prepayment penalties could affect you.\u00a0<\/span><\/p>\n

Balloon payments:<\/b> These payments are standard with an adjustable-rate mortgage. If there is a \u201cYes\u201d in this column, clarify what the balloon payments entail to ensure it\u2019s what you expect.\u00a0<\/span><\/p>\n

Projected Payments<\/span><\/h3>\n

The projected payments section will show you a breakdown of the loan payment amount provided in the loan terms section. The most critical pieces in this section are the estimated total monthly payments and estimated insurance, taxes, and assessments not being escrowed.<\/span><\/p>\n

Review these numbers and selections to understand your total monthly commitment and what costs and fees the lender requires you to escrow. If your taxes, insurance, or assessments are not in escrow, you will need to make a plan to pay these bills when they come due. (<\/span>See more about what escrow is and how it works<\/span><\/a>)<\/span><\/p>\n

Costs at closing<\/span><\/h3>\n

The last section on page one shows the estimated cash you\u2019ll need to close on the purchase. Most lenders will require you to wire the money to the <\/span>title company<\/span><\/a> or bring a cashier’s check with you to closing. You will also be required to show proof regarding the source of the funds, such as a bank statement or a gift letter Your lender should give you details as to how long you must have the funds in the bank before you can use them for closing.<\/span><\/p>\n

\"Living\u00a0<\/span><\/p>\n

Page two<\/span><\/h2>\n

Page two of your loan estimate breaks down each cost shown on page one. The lender also lays out their rules for mortgage payment amounts, how you can make mortgage payments, payment due date, and grace period.\u00a0<\/span><\/p>\n

Loan origination<\/b>: The first left-hand section on page two will explain the fees and costs associated with creating the loan, called origination fees. Lenders all charge origination fees to complete the application, pre-approval, approval, and closing process of the loan. When you compare estimates, make sure to compare the origination charges and review the total for accuracy.\u00a0<\/span><\/p>\n

Discount points:<\/b> You buy discount points if you plan to pay down a portion of the interest rate upfront. Your cost to purchase discount points will be listed here.\u00a0<\/span><\/p>\n

Services you can\u2019t shop for<\/b>: In this section, the lender will lay out specific services and service providers they require you to work with \u2013 you do not have the option to shop around for a cheaper provider for these services. Some of these services are related to the loan and terms themselves, such as <\/span>private mortgage insurance<\/span><\/a> (PMI) if your <\/span>down payment<\/span><\/a> is less than 20% or if you must pay funding fees associated with a VA or USDA loan.\u00a0<\/span><\/p>\n

Services you CAN shop for<\/b>: You will see the third-party services that the lender will arrange, such as <\/span>pest inspection<\/span><\/a>, environmental inspections, and title company services like title search and <\/span>title insurance<\/span><\/a>. With these services, you have the option to shop around for cheaper providers.\u00a0<\/span><\/p>\n

Taxes:<\/b> Here you will see the home\u2019s <\/span>property taxes<\/span><\/a>. Double-check that the form has the correct amount.\u00a0<\/span><\/p>\n

Homeowner’s insurance:<\/b> You will see the <\/span>homeowner\u2019s insurance<\/span><\/a> premium in this section. You can choose your insurance provider and will typically pay for 6 to 12 months of insurance premiums at or before closing. Double-check that the form has the correct amount.\u00a0<\/span><\/p>\n

Lender credits:<\/b> Your lender may offer a rebate to offset your closing costs. If so, you\u2019ll see that amount here. You may pay a higher interest rate on your loan in exchange for this rebate. Ask your lender about the options available and how credits may affect the cost of your loan.\u00a0<\/span><\/p>\n

Estimated cash to close:<\/b> This section will show you an estimate of how much money you’ll need to bring to closing. It breaks down the calculation of <\/span>closing costs<\/span><\/a>. This amount includes your down payment, minus any funds already paid to the seller or any amounts the seller agreed to pay toward closing. It will also subtract any other adjustments, like prorated taxes or discount points. If this number is not what you were expecting, ask your lender to explain.\u00a0<\/span><\/p>\n

\"Kitchen<\/p>\n

Page three<\/span><\/h2>\n

You will see your lender’s name, license number, and complete contact information on the third page. Verify this information is accurate.\u00a0<\/span><\/p>\n

The comparison section of this page will lay out specific costs you can use to compare lenders.\u00a0<\/span><\/p>\n

In 5 years: <\/b>This amount shows how much you will have paid off in 5 years and what you will have paid in total at the end of the loan term. If you plan to move before the end of your loan term, this number is helpful to help you understand your short-term upfront costs and total long-term costs.\u00a0<\/span><\/p>\n

APR<\/b>: The <\/span>Annual Percentage Rate<\/span><\/a> or APR combines lenders’ rates and fees, giving you another way to compare lenders. The APR reflects your upfront costs and total loan costs, including interest, expressed as a percentage.\u00a0<\/span><\/p>\n

Other considerations laid out in the loan estimate explain the appraisal, assumption (when one borrower takes over the loan to become a sole borrower, such as in a divorce for example), homeowner’s insurance, refinancing, servicing, and the treatment of late payments. The late payment section is critical as it will explain deadlines and additional charges if your payment is late.<\/span><\/p>\n

Loan Estimate\/Good Faith Estimate FAQs<\/span><\/h2>\n

Can I get multiple loan estimates?\u00a0<\/span><\/h3>\n

Applying for various loan estimates will not affect your <\/span>credit score<\/span><\/a> as long as you seek the estimates within a 45-day window. Each lender may charge you an upfront fee for your credit report.\u00a0<\/span><\/p>\n

When do you receive a loan estimate?\u00a0<\/span><\/h3>\n

The lender will provide a loan estimate within three business days of receiving your completed application. During the application process, you will provide the following personal information:\u00a0<\/span><\/p>\n