By OfferPrep Editorial · Last reviewed October 24, 2026 · 2 min read
The How Lending Works series
Why the form matters
Federal rules require lenders to send a Loan Estimate within three business days of receiving your application. Every lender uses the same layout, so you can lay two or three side by side.
Page 1: the loan at a glance
Loan term, purpose, product (fixed or adjustable), loan amount, interest rate, monthly principal and interest, and whether there's a prepayment penalty or balloon payment. Also: whether the rate is locked, and until when.
Page 2: closing costs
- Section A, origination charges: the lender's own fees, including any points you pay to lower the rate.
- Sections B and C, services: appraisal, credit report, title, and others. Section C lists services you can shop for.
- Sections E to H: taxes, government fees, prepaids, and escrow deposits.
- Lender credits: money the lender contributes, usually in exchange for a higher rate.
Page 3: comparisons
The APR, total interest percentage (TIP), and "In 5 Years" totals help compare cost over time.
How to compare two lenders fairly
- Same loan type, term, and loan amount.
- Estimates requested within a similar window, ideally the same day, since pricing changes.
- Compare Section A (lender fees) and points first; those vary most between lenders.
- Look at the "In 5 Years" line if you expect to sell or refinance.
- Use our free Compare Loan Estimates tool to line up two to four estimates. It reads the PDFs in your browser, explains each line, and flags estimates that aren't a fair match.
What can change before closing
Some fees can't increase, some can rise within a limit, and others can change. The Closing Disclosure, which you'll get at least three business days before closing, shows final numbers. Compare it to your Loan Estimate and ask about any difference.
Get the Reading a Loan Estimate Guide
A line-by-line printable walkthrough you can keep beside your own Loan Estimate. Then continue with part 5: rate locks.
Every free guide comes with OfferPrep's monthly educational newsletter: one plain-English lesson at a time. Browse all free guides.
Next in the series: Rate locks, explained.
Sources
Figures on this page were checked against the official sources below on October 24, 2026. Programs and limits change; confirm current figures with the source or a licensed lender before you rely on them.