What is a Loan Estimate?
How to read the standardized three-page mortgage disclosure, compare offers fairly, and separate estimated terms from approval and rate-lock status.
A Loan Estimate is a standardized three-page disclosure for many closed-end mortgage applications. It summarizes proposed loan terms, projected payments, estimated closing costs, and cash to close. For a covered transaction, the creditor generally must deliver it or place it in the mail no later than the third business day after receiving the six application items defined by federal rules.
Key facts
- Six application items: Name, income, Social Security number to obtain credit, property address, estimated property value, and loan amount sought.
- Three-page form: Every covered creditor uses the same basic form, which supports line-by-line comparison.
- Estimate, not approval: Receiving the form does not mean the loan has been underwritten or approved.
- Lock status matters: The form identifies whether the interest rate is locked and, if so, when the lock expires.
The first page sets the loan structure
Start with loan amount, interest rate, monthly principal and interest, and whether any of those terms can change. Check for a prepayment penalty or balloon payment. Then review the projected-payment table, which separates principal and interest from estimated taxes, insurance, mortgage insurance, and other assessments.
The rate-lock box deserves its own check. A rate displayed on a Loan Estimate is not necessarily locked. If it is locked, confirm the expiration date and the time zone shown on the form. A fair comparison uses the same loan type, property, occupancy, loan amount, down payment, points or credits, and lock assumptions.
The second page explains costs
Page two separates Loan Costs from Other Costs. Origination Charges are associated with the creditor. Services You Cannot Shop For and Services You Can Shop For contain third-party charges. Taxes, prepaids, initial escrow funding, and other transaction costs appear separately. The totals then flow into the cash-to-close calculation.
Do not compare only the headline rate or only the bottom-line cash figure. One offer may use discount points to lower the rate, while another may use a lender credit that reduces cash due in exchange for different pricing. The CFPB interactive Loan Estimate explains each line on the official form.
The third page supports comparison
The Comparisons section shows costs over a standardized period, annual percentage rate, and total interest percentage. Those figures answer different questions and are not interchangeable with the note rate. The page also identifies the creditor, loan officer, and licensing information and explains appraisal, assumption, servicing, and late-payment terms.
The strongest comparison uses official Loan Estimates prepared for the same scenario. The CFPB recommends requesting and reviewing multiple Loan Estimates. Informal fee worksheets can help early planning, but they are not substitutes for the regulated disclosure.
Why numbers may change
Some estimated charges are subject to zero-tolerance or limited-tolerance rules, while other amounts can change with actual services or timing. A valid changed circumstance or a borrower-requested change can support a revised Loan Estimate in situations allowed by Regulation Z. Prepaid interest, property taxes, insurance, and initial escrow funding can also move as dates and verified amounts become known.
When a number changes, ask which line changed, why it changed, whether a revised disclosure is required, and how the change affects cash to close. Keep each version so the final Closing Disclosure can be compared with the most recent Loan Estimate.
Primary sources
Reviewed against the linked primary sources on September 2, 2026. This page is general mortgage education; the current contract, disclosures, loan documents, agency or investor rules, and servicer records control a specific transaction.
Questions about this term
When should I receive a Loan Estimate?
For a covered transaction, the creditor generally must deliver or mail the Loan Estimate no later than the third business day after receiving your name, income, Social Security number to obtain credit, property address, estimated property value, and loan amount sought.
Does a Loan Estimate mean I am approved?
No. It describes estimated terms and costs for the requested transaction. The creditor may still need documents, verification, appraisal information, title work, and underwriting before making a credit decision.
Is the interest rate on a Loan Estimate locked?
Not necessarily. The form has a rate-lock section that says whether the rate is locked and, when applicable, gives the expiration date and time. Compare lock status along with rate, points, credits, and other terms.
How should I compare two Loan Estimates?
Use the same property and loan scenario, compare forms issued near the same time, and review loan terms, lock status, origination charges, lender credits, projected payments, and cash to close. A rate comparison alone can hide different upfront costs.
Can fees change after the Loan Estimate?
Some charges generally cannot increase, some are subject to an aggregate tolerance, and others can change with actual costs or timing. Federal rules also permit revised estimates after certain valid changes. Ask for the reason tied to the exact changed line.
Compare the whole form
Match the loan structure, timing, lock status, points, and credits before deciding that one headline rate is cheaper.