How to Read a Loan Estimate 2026: Every Line Explained
Your Loan Estimate is the most important document in your mortgage process — and most borrowers don't know how to read it. This line-by-line guide shows you exactly what to look for, what to compare, and which fees you can negotiate away.
Emily Chen
Financial Programs Expert · 8 years experience
What Is a Loan Estimate?
A Loan Estimate (LE) is a standardized 3-page form that every lender must provide within 3 business days of receiving your mortgage application. It shows your estimated rate, monthly payment, closing costs, and loan terms. Because all lenders use the same format, it's the perfect tool for comparing offers side-by-side.
Page 1: Loan Terms & Projected Payments
Page 1 contains the core terms of your loan and your estimated monthly payment. Here's every critical field:
Loan Terms Box (Top Right)
Projected Payments Box — Your Real Budget Number
Page 2: Closing Cost Details — Where to Negotiate
Zero Tolerance
Cannot increase at closing. Lender fees, transfer taxes.
10% Tolerance
Can increase up to 10% total. Recording fees, lender-selected services.
Can Change
No limit. Prepaid interest, insurance, services you shopped.
Origination Fee / Points
1 point = 1% of loan amount. Can buy down your rate. Negotiate this.
Underwriting Fee
Typically $400-$900. Compare across lenders.
Application Fee
Many lenders don't charge this. Ask for it to be waived.
Appraisal Fee
Typically $300-$700. Required by lender. Compare across lenders.
Credit Report Fee
Typically $15-$30. Standard across lenders.
Title Insurance (Owner's Policy)
Shop this — prices vary by 30-50% between providers.
Settlement / Closing Fee
Typically $500-$1,500. Can vary significantly by provider.
Get Multiple Loan Estimates to Compare
The CFPB recommends getting at least 3 Loan Estimates. Borrowers who compare save an average of $3,000 over the life of their loan.
Compare Loan Estimates — Free →How to Compare Loan Estimates Side-by-Side
| # | What to Compare | Where to Find It | Why It Matters |
|---|---|---|---|
| 1 | Interest Rate | Page 1, Loan Terms box | Drives your monthly payment |
| 2 | APR | Page 3, Comparisons table | True cost including all fees |
| 3 | Total Closing Costs | Page 2, bottom total | Cash needed at closing |
| 4 | Lender Fees (Section A) | Page 2, Section A | Negotiable — compare directly |
| 5 | Cash to Close | Page 1, bottom right | Your actual out-of-pocket |
| 6 | Monthly Payment | Page 1, Projected Payments | Your ongoing budget impact |
Red Flags on a Loan Estimate
Balloon Payment: YES
A large lump sum due at loan end. Rare on standard mortgages. Ask your lender to explain immediately.
Prepayment Penalty: YES
You'll be charged for paying off the loan early. Avoid this on conventional loans.
Interest Rate Can Increase: YES
This is an ARM, not a fixed-rate loan. Make sure you understand the caps and adjustment schedule.
Origination Fee over 1%
Origination fees above 1% of the loan amount are high. Negotiate or shop another lender.
Unusually low rate with high fees
Some lenders advertise low rates but bury costs in fees. Always compare the APR, not just the rate.
Loan Estimate vs. Closing Disclosure
| Feature | Loan Estimate | Closing Disclosure |
|---|---|---|
| When provided | Within 3 days of application | 3 business days before closing |
| Numbers | Estimated | Final and binding |
| Purpose | Compare lenders, understand costs | Verify final terms before signing |
| Can you back out? | Yes, no obligation | Yes, but may lose deposits |
| Key action | Compare 3+ estimates | Compare to original Loan Estimate |
Frequently Asked Questions
What is a Loan Estimate?
How long do I have to accept a Loan Estimate?
What fees on a Loan Estimate are negotiable?
Can fees increase between the Loan Estimate and Closing Disclosure?
What is the APR on a Loan Estimate?
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Emily Chen
Financial Programs & First-Time Buyer Expert · NMLS #923847
Emily has 8+ years of experience helping first-time buyers understand mortgage documents and navigate the closing process. She has helped over 1,200 families close on their first homes.