Mortgage closing costs and the Loan Estimate, explained
The Loan Estimate is a standard 3-page form lenders must give you within 3 business days of receiving your application. It shows your rate, monthly payment and estimated closing costs, in the same format at every lender, so you can compare offers. Page 2 splits costs into Loan Costs (A: origination charges, B: services you can't shop for, C: services you can shop for) and Other Costs (taxes and government fees, prepaids, initial escrow). At least 3 business days before closing you'll get a Closing Disclosure with the final numbers.
Page 1: the loan terms
Loan amount, interest rate, monthly principal and interest, and whether any of these can increase after closing. It also shows whether there's a prepayment penalty or balloon payment, projected payments including escrow, estimated closing costs and estimated cash to close.
Page 2: closing cost details
| Section | What's in it | Can you shop or negotiate? |
|---|---|---|
| A. Origination charges | What the lender charges to make the loan: origination, application, processing or underwriting fees, and points | Negotiate with the lender, or compare lenders |
| B. Services you cannot shop for | Third-party services the lender chooses, such as the appraisal, credit report and flood determination | Not by choosing the provider, but compare across lenders |
| C. Services you can shop for | Services such as title insurance, title search, settlement agent, survey and pest inspection | Yes; the lender must give you a list of providers, and you can choose others |
| E. Taxes and other government fees | Recording fees and transfer taxes | Set by government; who pays transfer tax may be negotiable with the seller |
| F. Prepaids | Homeowners insurance premium, prepaid interest, sometimes property taxes | You can shop for homeowners insurance |
| G. Initial escrow payment | Starting balance for your escrow account | Required by many lenders |
| H. Other | Items like owner's title insurance, HOA fees, home inspection | Often shoppable or negotiable with the seller |
Section structure from the CFPB Loan Estimate explainer.
Page 3: comparisons
"In 5 Years" shows how much you'll have paid and how much principal you'll have paid off. It also shows the APR and the Total Interest Percentage (TIP). These are the quickest lines for comparing offers from different lenders.
Which costs can change before closing?
Under the federal "Know Before You Owe" rules, some costs generally can't increase from the Loan Estimate (such as the lender's own charges), some can increase only within limits, and others can change. If something changes, compare your Closing Disclosure against your Loan Estimate and ask the lender to explain every difference. The CFPB has a checklist for this.
Ways to lower closing costs
- Get Loan Estimates from several lenders on the same day and compare sections A and B.
- Shop the section C services, especially title and settlement.
- Ask for lender credits (in exchange for a higher rate), or negotiate seller concessions in your purchase contract.
- Ask the lender to waive or reduce application, processing or underwriting fees. See how to negotiate loan terms.
Frequently asked questions
When do I get a Loan Estimate?
Lenders must provide it within 3 business days of receiving your application (name, income, SSN for a credit check, property address, estimated value and loan amount).
When do I get the Closing Disclosure?
You must receive it at least 3 business days before closing, so you have time to compare it with the Loan Estimate and ask questions.
Can I shop for title insurance?
Usually yes. Title services generally appear in section C, 'Services You Can Shop For.' The CFPB recommends comparing providers.
Is the Loan Estimate an approval?
No. It is a disclosure of estimated terms and costs. It does not mean the lender has approved the loan.
Sources
- CFPB: Loan Estimate explainer (accessed October 29, 2026)
- CFPB: Closing Disclosure explainer (accessed October 29, 2026)
- CFPB: TILA-RESPA integrated disclosures (Know Before You Owe) (accessed October 29, 2026)
- CFPB: Shop for title insurance and other closing services (accessed October 29, 2026)
- CFPB: Request and review multiple Loan Estimates (accessed October 29, 2026)
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