How to read a Loan Estimate — and compare lenders
Every mortgage lender must give you the same three-page form within three business days. Here's what to check on each page, which costs are locked in, and how to tell which offer is cheaper.
Updated October 23, 2026 · 8 min read · Numbers computed with our tested calculators and official sources.
Short answer
The Loan Estimate is a standard three-page form every lender must send within three business days of your mortgage application. Page 1 shows the loan, payment and cash to close; page 2 itemizes the closing costs; page 3 has the APR and other comparisons. Because every lender uses the same form, you can lay two side by side. The key lines: the interest rate, section A on page 2 (the lender's own charges, including points), and the APR on page 3.
When you get it
Your application is complete once you give a lender six things: your name, income, Social Security number, the property address, an estimated value and the loan amount. From then, the lender has three business days to deliver or mail the Loan Estimate. Before you receive it and say you want to proceed, the lender can charge only a reasonable credit report fee. That makes it free to collect estimates from several lenders — ideally on the same day, because rates move daily.
Page 1: the loan and your payment
- Loan terms: the loan amount, interest rate and monthly principal and interest — and whether any of them can rise, or there's a prepayment penalty or balloon payment. You want "NO" on the last three.
- Rate lock: whether the rate is locked and until when. Some lenders lock with the estimate; many don't.
- Projected payments: the full monthly payment including mortgage insurance and the estimated escrow for property taxes and insurance. Check it against the mortgage calculator.
- Costs at closing: total closing costs and the estimated cash to close (down payment plus costs, minus credits and deposits).
Page 2: closing costs, section by section
- A. Origination charges — what the lender itself charges, including points. This is the cleanest number to compare between lenders.
- B. Services you cannot shop for — appraisal, credit report, flood certification and the like.
- C. Services you can shop for — usually title services and the settlement agent. Get your own quotes.
- E. Taxes and other government fees — recording fees and transfer taxes. Transfer taxes vary from $0 to 4% of the price by state; see yours in the closing cost calculator.
- F–G. Prepaids and initial escrow — homeowners insurance, prepaid interest and the first property tax and insurance deposits. These depend on your closing date and aren't really lender fees.
- J. Total closing costs, then lender credits (a negative number — money the lender gives you, usually for a higher rate).
Page 3: comparisons
The APR rolls certain fees into a yearly rate, so a lower APR usually means a cheaper loan if you keep it for a long time. The TIP (total interest percentage) shows total interest over the full term as a percent of the loan. Page 3 also lists the late fee and whether the lender plans to transfer servicing.
Which costs can change before closing
| Can increase by | Costs |
|---|---|
| $0 | Fees paid to the lender or broker (section A), services you weren't allowed to shop for, transfer taxes |
| 10% in total | Recording fees, and services you could shop for but picked from the lender's list |
| Any amount | Prepaid interest, homeowners insurance, escrow deposits, and services you shopped for on your own |
If the final costs go over these limits, the lender must refund the difference. A lender can issue a revised estimate when something real changes — for example, a lower appraisal or a different loan amount you asked for.
Comparing two offers: are points worth it?
Say two lenders quote on the same $360,000, 30-year loan:
| Rate | Points (section A) | Principal & interest | |
|---|---|---|---|
| Lender A | 6.25% | $3,600 (1 point) | $2,216.58 |
| Lender B | 6.5% | $0 | $2,275.44 |
Lender A costs $3,600 more upfront and saves $58.86 a month, so it takes about 62 months (≈ 5.2 years) to come out ahead. If you might sell or refinance sooner, the no-points loan is cheaper. These rates are examples — use your real quotes, and run a future refinance through the refinance calculator.
Checklist before you pick a lender
- Get two or three Loan Estimates on the same day for the same loan amount, term and loan type.
- Compare the rate, section A and the APR — not just the total closing costs, which include items that don't depend on the lender.
- Check page 1 for a prepayment penalty or balloon payment.
- Ask how long the rate is locked and what an extension costs.
- Shop section C services (title and settlement) — or ask the lender to match a competitor's section A.
- When the Closing Disclosure arrives (at least three business days before closing), compare it line by line with the Loan Estimate.
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Frequently asked questions
When do I get a Loan Estimate?+
Within three business days after the lender receives your application. An application is complete once you've given six things: your name, income, Social Security number (for a credit report), the property address, an estimate of its value and the loan amount you want.
Can a lender charge me before I get the Loan Estimate?+
Only a reasonable fee for pulling your credit report. Application, appraisal and other fees can't be charged until you've received the Loan Estimate and told the lender you want to go ahead.
Can closing costs go up after the Loan Estimate?+
Some can't go up at all: the lender's own fees and transfer taxes. Recording fees and services from the lender's list can rise by up to 10% in total. Others, like prepaid interest, homeowners insurance, escrow deposits and services you shop for on your own, can change. If your circumstances change (a different loan amount or a lower appraisal), the lender can issue a revised estimate.
What's the difference between the Loan Estimate and the Closing Disclosure?+
The Loan Estimate is the lender's offer early in the process. The Closing Disclosure is the final version, which you must receive at least three business days before closing. Compare them line by line and ask about any increase.
What do APR and TIP mean on page 3?+
APR is the yearly cost of the loan including some fees, so it's useful for comparing offers with different fees. TIP (total interest percentage) is the total interest you'd pay over the loan's life as a percent of the loan amount.