How to read a loan estimate
A loan estimate is the standard three page form a US lender must send within three business days of your application. Page one shows the loan amount, rate, monthly payment and cash to close. Page two breaks down closing costs, including which services you can shop for. Page three shows the APR and total interest over the loan. Lay two side by side to compare.
Why it matters: The loan estimate is the one form that lets you compare lenders line by line.
Steps
- Ask each lender for a loan estimate for the same loan amount, type and term.
- On page one, compare the rate, whether it is locked, the monthly payment and the estimated cash to close.
- Check whether the loan has a prepayment penalty or a balloon payment.
- On page two, compare origination charges, which are the lender's own fees.
- Note the services you can shop for, such as title or survey, and ask for alternatives.
- On page three, compare the APR and the total interest percentage.
- Write your questions on the form and ask the lender before choosing.
Stop and call a professional if
- you need a recommendation for your own loan, policy or tax situation: ask a licensed loan officer, housing counselor, insurance agent or tax professional
- the estimate has a balloon payment or prepayment penalty you were not told about: ask the loan officer to explain it in writing, or talk to a housing counselor
Questions to ask the professional
- Is this rate locked, and until when?
- Which of these closing costs can change before closing?
Common mistakes
- Comparing estimates for different loan amounts or terms.
- Missing that the rate is not locked yet.
- Looking only at the monthly payment on page one.
Outside the US or in another state: This is the US standard form; other countries use their own disclosures.
Teach this to someone
A one page sheet for showing a friend, a teenager or a parent: what to say, what to show, and one question to check it landed.
Teach: How to read a loan estimate
What to say
A loan estimate is the standard three page form a US lender must send within three business days of your application. Page one shows the loan amount, rate, monthly payment and cash to close. Page two breaks down closing costs, including which services you can shop for. Page three shows the APR and total interest over the loan. Lay two side by side to compare.
What to show
- Ask each lender for a loan estimate for the same loan amount, type and term.
- On page one, compare the rate, whether it is locked, the monthly payment and the estimated cash to close.
- Check whether the loan has a prepayment penalty or a balloon payment.
- On page two, compare origination charges, which are the lender's own fees.
- Note the services you can shop for, such as title or survey, and ask for alternatives.
- On page three, compare the APR and the total interest percentage.
- Write your questions on the form and ask the lender before choosing.
Where it stops
Stop and call a professional if you need a recommendation for your own loan, policy or tax situation: ask a licensed loan officer, housing counselor, insurance agent or tax professional.
Check question
How soon after an application must a US lender send a loan estimate?
Answer: Within three business days. The timing rule lets you compare lenders early.
Your checklist
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Quick quiz
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Related skills
Sources
- US federal consumer guidance on mortgage disclosures and closing, 2025. Reviewed September 28, 2026.
Written in our own words from the sources above. It is general information, not advice for your situation; where a professional, your doctor or your lease says something different, follow them.
Last reviewed . First published .