Loan Estimate

· 2 min read
A Loan Estimate is a standardized three-page document every mortgage lender must give you within three business days of receiving your application — and it’s…

A Loan Estimate is a standardized three-page document every mortgage lender must give you within three business days of receiving your application — and it’s the single best tool for comparing loan offers. The Consumer Financial Protection Bureau (CFPB) designed the format so every lender’s numbers appear in the exact same layout.

What’s Inside

Page 1 shows your loan amount, interest rate, monthly payment, estimated taxes and insurance, and total closing costs. Page 2 breaks down closing costs into origination charges, services you can shop for, and prepaid items. Page 3 covers cash-to-close and a comparison table showing total costs over five years.

The format hasn’t changed since 2015, so once you learn to read one, you can read them all.

Dollar Example

Lender A’s Loan Estimate shows $8,400 in total closing costs on a $300,000 loan. Lender B shows $6,900 for the same loan amount but with a rate 0.125% higher. Over 5 years, Lender B’s total cost (including the higher rate) is still $1,100 less. You wouldn’t know that without comparing the Loan Estimates side by side.

Watch Out

The Loan Estimate is exactly that — an estimate. Certain fees can change between the Loan Estimate and your final Closing Disclosure. Origination charges can’t increase at all. Third-party fees the lender selected can increase up to 10%. But fees for services you shop for yourself, prepaid interest, and insurance premiums can change without limit.

Get Loan Estimates from at least three lenders on the same day so rates are comparable. Then use our comparison tool to plug in each scenario. The lender with the lowest rate doesn’t always have the lowest total cost. Our mortgage calculator can help you model each offer’s monthly payment.

Frequently Asked Questions

Does getting a Loan Estimate affect my credit score?

Getting one Loan Estimate triggers a hard credit pull that can ding your score a few points. But here’s the good news: all mortgage credit inquiries within a 14-45 day window (depending on the scoring model) count as a single pull. So apply to five lenders in the same week and it only hits your score once.