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Amortization — The process of paying off a loan through regular payments over time, with each payment covering both principal and interest.
Asset Depletion — A qualification method that calculates income by dividing liquid assets over a set period, used for borrowers with substantial assets but limited documentable income.
Bank Statement Loan — A mortgage that uses bank statement deposits rather than tax returns to verify and calculate income, designed primarily for self-employed borrowers.
Cash-Out Refinance — A refinance that replaces your existing mortgage with a larger loan, allowing you to take the difference as cash.
CPA Letter — A letter from a certified public accountant verifying business ownership, self-employment status, and/or expense ratios.
Debt-to-Income Ratio (DTI) — The percentage of your gross monthly income that goes toward monthly debt payments, including the proposed mortgage.
Down Payment — The portion of the purchase price paid upfront in cash, not financed by the mortgage.
Expense Factor — The percentage deducted from business bank statement deposits to account for business operating costs when calculating qualifying income.
Full Documentation Loan — A traditional mortgage requiring tax returns, W-2s, and pay stubs to verify income, as opposed to bank statement or other alternative documentation.
Interest-Only Loan — A loan where payments cover only interest for a set period, after which payments increase to include principal.
Jumbo Loan — A mortgage exceeding conforming loan limits set by the FHFA, currently $766,550 in most areas.
Loan-to-Value (LTV) — The ratio of your loan amount to the property’s value, expressed as a percentage. An 80% LTV means you’re borrowing 80% and putting 20% down.
Non-QM Loan — A non-qualified mortgage that doesn’t meet the Consumer Financial Protection Bureau’s qualified mortgage standards. Bank statement loans are non-QM products.
Non-Warrantable Condo — A condominium that doesn’t meet Fannie Mae or Freddie Mac guidelines due to factors like investor concentration, litigation, or insufficient reserves.
Occupancy Type — How you intend to use the property: primary residence, second home, or investment property.
PITIA — Principal, Interest, Taxes, Insurance, and Association dues—the components of a complete monthly housing payment.
Profit and Loss Statement (P&L) — A financial document summarizing business revenue and expenses over a specific period.
Qualifying Income — The income amount a lender uses to calculate your debt-to-income ratio and determine how much you can borrow.
Rate Adjustment — An increase or decrease to the base interest rate based on risk factors like credit score, LTV, property type, or loan amount.
Reserves — Liquid assets remaining after closing, measured in months of PITIA payments.
Self-Employed — Working for yourself rather than an employer, including sole proprietors, LLC members, S-corp shareholders, and independent contractors.
Super Jumbo Loan — A mortgage significantly exceeding standard jumbo thresholds, typically over $2-3 million.
Warrantable Condo — A condominium that meets Fannie Mae and Freddie Mac guidelines, making it eligible for conventional financing. 
