plain language
Homebuying Glossary
Every term a builder, a lender, or a title company is likely to use with you, defined in plain language. If someone uses a word you do not know, stop them and ask. A good professional will be glad you did.
A
- AMI (Area Median Income)
- The midpoint household income for a metropolitan area, published annually by HUD and adjusted by household size. Assistance programs set eligibility as a percentage of AMI, so the same income can qualify in one household size and not another.
- Appraisal
- An independent assessment of a property's market value, ordered by the lender before approving the loan.
C
- Closing costs
- Fees paid at closing to the lender, title company and third parties, usually adding up to a few percent of the purchase price.
- Closing Disclosure
- A document from the lender detailing the final loan terms and all costs, provided at least three business days before closing.
- Conventional loan
- A mortgage not backed by a government agency (FHA, VA, USDA).
- Credit utilization
- The percentage of your available credit you are currently using, calculated as your balance divided by your credit limit.
D
- Debt-to-income ratio (DTI)
- Monthly debt payments divided by gross monthly income.
- Deed
- The legal document that transfers property ownership.
- Down payment
- The portion of the purchase price paid upfront by the buyer.
E
- Earnest money
- A good-faith deposit submitted with the purchase contract, credited toward the buyer's costs at closing.
- Escrow
- An account held by the lender to collect monthly property tax and insurance payments, which the lender then pays on the buyer's behalf.
F
- FHA loan
- A mortgage insured by the Federal Housing Administration, available with as little as 3.5% down.
- Forgivable second lien
- A secondary loan (typically for down payment assistance) that is forgiven after a set occupancy period.
H
- Homestead exemption
- A property tax reduction available on your primary residence in Texas. The school district exemption is $140,000, with an additional $60,000 for homeowners 65 or older or with a qualifying disability, and you do have to file for it with your county appraisal district.
- HUD-approved homebuyer education
- A course required by many down payment assistance programs, covering the homebuying process, budgeting, and mortgage responsibilities.
L
- Loan Estimate
- A standardized document from the lender laying out your estimated loan terms, monthly payment and closing costs, which you should receive within three business days of applying.
M
- MUD (Municipal Utility District)
- A special taxing district that finances water, sewer and road infrastructure in newly developed areas, with its rate showing up as part of your property tax bill.
O
- Orientation walkthrough
- The builder walks the buyer through the completed new-construction home. Cosmetic and functional issues are marked with blue tape for correction before the final walkthrough.
P
- PMI (Private Mortgage Insurance)
- Insurance required on conventional loans when you put down less than 20%, which can come off once you have built up enough equity.
- Pre-approval
- A conditional commitment from a lender based on verified credit, income, and documentation.
- Pre-drywall inspection
- An independent inspection performed after framing and mechanical rough-in but before drywall is installed.
- Pre-qualification
- An initial estimate of how much you might be able to borrow, based on information you report yourself rather than anything the lender has verified.
- Prepaids
- Taxes, insurance, and interest paid in advance at closing and deposited into escrow.
- Punch list
- The written list of items a builder commits to correcting after the orientation walkthrough, with a timeline for completion.
R
- Rate buydown
- Paying an upfront cost, often funded by a builder incentive, to reduce the interest rate on the mortgage.
- Rate lock
- A commitment from the lender to hold a specific interest rate for a set period.
- Reserve
- Savings you keep back after closing to cover the unexpected, usually a few months of your full housing payment.
S
- Soft second
- A deferred second lien used for down payment assistance that must be repaid in full on sale or refinance, rather than being forgiven after a set period.
T
- Title commitment
- A document from the title company confirming the property has clear title and the company is prepared to insure it.
- Title insurance
- Insurance protecting the buyer and lender against claims or defects in the property's ownership history.
- TREC
- Texas Real Estate Commission, the regulatory body for real estate agents and brokers in Texas.
U
- Underwritten pre-approval
- A pre-approval that has been reviewed by an underwriter, the strongest form of financing commitment a buyer can present.
- USDA loan
- A mortgage backed by the U.S. Department of Agriculture for eligible rural and suburban properties, with no down payment required.
V
- VA loan
- A mortgage backed by the U.S. Department of Veterans Affairs for eligible veterans and service members, with no down payment required and no monthly mortgage insurance.
Tax and exemption figures current as of September 2026 — verify with the administering agency. These definitions are general explanations for educational purposes and are not legal, tax, or lending advice. Specific terms in your contract or loan documents control, and your loan officer, title company, and attorney are the right people to explain how any of this applies to your situation.
Mary De Pinho | Texas Real Estate License #579203 | Dalton Wade Real Estate Group
Mary De Pinho is a licensed real estate agent and is not a lender, mortgage broker, or credit repair organization. Information about down payment assistance programs, credit readiness, and mortgage financing is provided for educational purposes only and does not constitute financial, legal, or credit repair advice. Assistance program eligibility, terms, income limits, and available funding are subject to change and are determined by the administering agency, not by the agent. Results vary by individual situation. Figures cited in this material were current as of the date of publication; verify all program details with the appropriate agency before making financial decisions.
Equal Housing Opportunity. Mary De Pinho does not discriminate on the basis of race, color, religion, sex, national origin, familial status, disability, or any other class protected under federal, state, or local fair housing law.
Buyer representation is provided under a written buyer representation agreement. The agent's commission for new-construction purchases is paid by the builder at no cost to the buyer. Terms of representation are disclosed in writing before services begin, in accordance with current Texas Real Estate Commission rules.