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18+ years simplifying complex mortgage terminology for Nevada homebuyers. Former mortgage underwriter and certified financial counselor dedicated to first-time buyer education.
Master the language of home financing with our comprehensive mortgage glossary. From APR to PMI, understand key terms to navigate your Nevada home purchase with confidence.
A mortgage with an interest rate that can change periodically based on market conditions. ARMs typically start with a lower rate than fixed-rate mortgages but can increase or decrease over time. Common types include 5/1 ARM or 7/1 ARM, where the first number indicates years at a fixed rate before adjusting annually.
The process of paying off a loan through regular monthly payments that include both principal and interest. Early payments are mostly interest, while later payments apply more toward principal. A 30-year mortgage amortizes over 360 monthly payments. Use our amortization calculator to see your payment breakdown.
The total cost of borrowing expressed as a yearly rate, including interest rate plus fees like origination charges, discount points, and mortgage insurance. APR is always higher than the interest rate and gives a more accurate picture of loan costs. Nevada lenders must disclose APR in your Loan Estimate.
A professional assessment of a property's market value conducted by a licensed appraiser. Required by lenders to ensure the home's worth supports the loan amount. In Nevada, appraisals typically cost $400-$600 and take 7-10 days. If appraisal comes in low, you may need to renegotiate price or bring more cash.
A mortgage that can be transferred from the seller to the buyer, allowing the buyer to take over the existing loan terms and rate. VA and FHA loans are typically assumable with lender approval. This can be advantageous in a rising rate environment when assuming a lower rate loan.
A mortgage with lower monthly payments for a set period followed by one large "balloon" payment of the remaining principal. Less common today but sometimes used for commercial properties or short-term financing strategies.
Short-term financing used to "bridge" the gap between buying a new home and selling your current one. These loans typically have higher interest rates and are paid off when your existing home sells. Common in competitive Nevada markets where sellers need strong offers without home sale contingencies.
A financing technique where the seller or builder pays upfront to temporarily reduce your interest rate. A 2-1 buydown reduces your rate by 2% the first year and 1% the second year before returning to the permanent rate. Popular in Nevada's new construction market. Learn more about temporary buydowns.
Refinancing for more than you owe on your current mortgage and taking the difference in cash. Homeowners use cash-out refis for home improvements, debt consolidation, or major purchases. Nevada homeowners with significant equity can access funds at mortgage rates, typically lower than personal loans or credit cards. Learn more about cash-out refinancing.
Fees and expenses paid at closing, typically 2-5% of the loan amount. Include origination fees, appraisal, title insurance, escrow fees, recording fees, and prepaid items like property taxes and insurance. Nevada closing costs average $3,000-$6,000 for a $300,000 home. See our detailed guide on Nevada closing costs.
A conventional mortgage that meets Fannie Mae and Freddie Mac guidelines, including maximum loan limits. For 2025, Nevada's conforming loan limit is $806,500 for single-family homes in most counties. Conforming loans typically offer better rates than jumbo loans. See Nevada loan limits.
A mortgage not insured by the federal government (unlike FHA or VA loans). Conventional loans typically require higher credit scores (620+) and larger down payments but offer competitive rates and the ability to remove PMI at 20% equity. The most common type of mortgage for Nevada buyers with strong credit.
A numerical representation (300-850) of your creditworthiness based on credit history, payment patterns, debt levels, and credit age. Mortgage lenders typically use FICO scores. Higher scores qualify for better rates: 740+ gets the best conventional rates, 620 is the minimum for most conventional loans, and 580 qualifies for FHA with 3.5% down. Nevada average credit score is around 700.
The percentage of your gross monthly income that goes toward debt payments. Calculated as (total monthly debts ÷ gross monthly income) × 100. Most conventional loans require DTI below 43-50%, though some programs allow higher with compensating factors. Use our DTI calculator to check yours. Learn why DTI matters.
The upfront cash you pay toward the home purchase, expressed as a percentage of the purchase price. Conventional loans can require as little as 3% down, FHA requires 3.5%, VA and USDA allow 0% down for qualified borrowers. Larger down payments reduce monthly payments and may eliminate mortgage insurance. Nevada offers down payment assistance programs for first-time buyers.
A deposit made to demonstrate serious intent to purchase a home, typically 1-3% of the purchase price in Nevada. Held in escrow and applied to your down payment or closing costs at closing. If you back out without a valid contingency, you may forfeit this deposit.
The portion of your home that you truly own: current market value minus what you owe on the mortgage. Equity builds through monthly principal payments and home appreciation. Nevada homeowners can tap equity through cash-out refinancing or home equity loans for major expenses.
A neutral third-party account that holds funds during a real estate transaction. In Nevada, escrow companies handle the closing process. Also refers to the lender-held account for property taxes and insurance, where a portion of your monthly mortgage payment is deposited to cover annual bills.
A mortgage with an interest rate that remains constant for the entire loan term, most commonly 15 or 30 years. Monthly principal and interest payments never change, providing predictability. The most popular mortgage type in Nevada. Compare 15-year vs 30-year mortgages.
A mortgage insured by the Federal Housing Administration, designed for first-time buyers and those with lower credit scores or smaller down payments. Requires minimum 3.5% down with 580 credit score, or 10% down with 580-579 credit. FHA loans require upfront and annual mortgage insurance premiums. Nevada FHA loan limits match conforming limits in most counties. Complete FHA guide for Nevada.
A temporary pause or reduction in mortgage payments granted by the lender during financial hardship. Common during COVID-19 pandemic. After forbearance ends, you must repay missed payments through a repayment plan, loan modification, or deferral. Refinancing after forbearance.
Now replaced by the Loan Estimate form (LE), which lenders must provide within 3 business days of application. The LE details estimated loan terms, projected monthly payments, and closing costs to help Nevada borrowers shop and compare offers.
A revolving line of credit secured by your home equity, similar to a credit card. You can borrow, repay, and borrow again during the draw period (typically 10 years), followed by a repayment period. Interest rates are variable. Used for ongoing expenses like home renovations or college tuition.
A lump-sum loan secured by your home equity with a fixed interest rate and term. Often called a "second mortgage." Used for one-time expenses. Different from HELOC which is revolving credit. Nevada homeowners often compare home equity loans vs cash-out refinancing.
Insurance that protects your home and belongings from damage or theft. Required by all mortgage lenders and must be maintained throughout the loan. Nevada homeowners insurance averages $1,000-$1,500 annually, though desert climate and wildfire risks can affect premiums. Tips to lower your Las Vegas insurance premium.
The percentage charged by the lender for borrowing money, expressed as an annual rate. Different from APR which includes fees. Your rate depends on credit score, down payment, loan type, and market conditions. Even a 0.25% rate difference can save thousands over a 30-year Nevada mortgage. Check today's Nevada rates.
A loan where you pay only interest for an initial period (typically 5-10 years), with no principal reduction. After the interest-only period, payments increase significantly to pay off principal. Rare in today's market but sometimes used by high-income borrowers expecting income growth or property appreciation.
A mortgage that exceeds conforming loan limits ($806,500 for most Nevada counties in 2025). Jumbo loans typically require higher credit scores (700+), larger down payments (10-20%), and have slightly higher interest rates due to increased risk for lenders. Common in Nevada's luxury home market. Nevada jumbo loan guide.
A standardized three-page form lenders must provide within 3 business days of your application. Details loan terms, projected payments, and closing costs. Replaced the old Good Faith Estimate (GFE). Use this to compare offers from different Nevada lenders. Understanding your Loan Estimate.
The loan amount divided by the property's value or purchase price, expressed as a percentage. A $300,000 loan on a $400,000 home is 75% LTV. Lower LTV ratios qualify for better rates and terms. LTV above 80% typically requires mortgage insurance on conventional loans. Important for refinancing and removing PMI.
The timeframe during which your locked interest rate is guaranteed, typically 30-60 days. If rates rise during this period, you're protected. If they fall, you're usually locked in (unless you have a float-down option). Timing your rate lock is crucial in volatile markets. Rate lock strategies.
Insurance that protects the lender if you default. Required on conventional loans with less than 20% down (PMI), all FHA loans (MIP), and some other government-backed loans. Costs typically 0.3-1.5% of loan amount annually. Conventional PMI can be removed at 20% equity; FHA MIP lasts the life of most loans. How to avoid or remove PMI.
The specific term for mortgage insurance on FHA loans. Includes both an upfront premium (1.75% of loan amount, typically financed) and annual premium (0.45-1.05% depending on loan terms). Unlike conventional PMI, FHA MIP cannot be removed on loans with less than 10% down and lasts for the life of the loan.
Upfront fees paid to reduce your interest rate, also called discount points. One point = 1% of the loan amount and typically reduces your rate by 0.25%. Buying points makes sense if you plan to keep the loan long enough to recoup the cost through lower monthly payments. When to buy mortgage points.
A fee charged by the lender for processing your loan application, typically 0.5-1% of the loan amount. Sometimes called points but these are different from discount points which buy down your rate. Nevada lenders must disclose origination fees in your Loan Estimate. Negotiable on some loans.
Acronym for Principal, Interest, Taxes, and Insurance – the four components of a typical monthly mortgage payment. Lenders use PITI to calculate your debt-to-income ratio and affordability. Nevada property taxes average 0.6-0.8% of home value annually, lower than the national average.
A lender's conditional commitment to loan you a specific amount based on verified financial information. Requires submitting income documents, credit authorization, and assets. A pre-approval letter shows Nevada sellers you're a serious, qualified buyer and strengthens your offer. More reliable than pre-qualification. Pre-approval vs pre-qualification explained.
An informal estimate of how much you might borrow based on self-reported financial information. Less rigorous than pre-approval, does not verify information or pull credit in detail. Useful for initial planning but won't carry weight with Nevada sellers. Get pre-approved instead when seriously shopping.
The amount borrowed or the remaining balance on your loan, excluding interest. Each monthly payment includes both principal and interest. Early in the loan, most goes to interest; later payments apply more to principal, building equity faster. Extra principal payments reduce your balance and total interest paid.
Insurance required on conventional loans when down payment is less than 20%. Protects the lender if you default. Costs 0.3-1.5% of loan amount annually ($50-$200/month on a $300,000 loan). Major advantage over FHA: PMI can be cancelled when you reach 20% equity through payments or appreciation. Calculate your PMI.
Refinancing to change your interest rate or loan term without taking cash out. Nevada homeowners refinance to lower their rate, switch from ARM to fixed-rate, or change from 30-year to 15-year to build equity faster. Different from cash-out refinancing. Rate-and-term refinance guide.
Replacing your existing mortgage with a new one, typically to get a lower rate, change the loan term, switch loan types, or access equity through cash-out. Nevada homeowners refinance when rates drop 0.5-0.75% or more to recoup closing costs through lower payments. Explore refinancing options.
Insurance that protects against loss from defects in title (ownership rights) such as liens, encroachments, or ownership disputes. Two policies: lender's (required, protects their interest) and owner's (optional but recommended, protects you). One-time premium paid at closing. Nevada title insurance costs roughly $1,000-$1,500 for a $300,000 home.
A detailed examination of public records to verify the property's legal ownership and check for liens, claims, or encumbrances. Performed before closing to ensure clear title can be transferred. Any issues (like unpaid contractor liens or disputed boundaries) must be resolved before closing.
The lender's process of evaluating your loan application to determine risk and whether to approve your mortgage. Underwriters verify income, assets, credit, employment, and appraisal value against lending guidelines. Most conventional loans are underwritten to Fannie Mae or Freddie Mac standards. Takes 3-5 days for initial decision in Nevada.
A mortgage guaranteed by the Department of Veterans Affairs for eligible veterans, active-duty service members, and surviving spouses. Benefits include 0% down payment, no PMI, competitive rates, and flexible credit requirements. Requires a VA funding fee (1.4-3.6% depending on down payment and usage) unless exempt due to disability. Nevada has a strong military community utilizing VA benefits. Learn more at VAHomeLoans.services.
Now that you understand mortgage terminology, you're ready to navigate the Nevada home financing process with confidence. Get your personalized rate quote and see what you qualify for.
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