Reference
Mortgage and Florida home-buying glossary
The vocabulary of buying a home, in plain language — including the Florida-specific terms (homestead, flood, millage, Citizens) the national glossaries leave out.
Every term below links to a fuller explanation, and the definitions here defer any figure that changes — a tax rate, a premium, a program limit — to its primary source rather than stating it as fact. Start anywhere, or jump into the first-time buyer's guide or the full resource library.
Mortgage basics
- Principal
- Principal is the amount you borrow — the loan balance itself, before interest. Each mortgage payment splits between paying principal down and paying interest.
- APR (annual percentage rate)
- APR expresses a loan's yearly cost including certain fees, not just the interest rate. It's built to compare offers — but only fairly between similar loan types.
- Amortization
- Amortization is the schedule that pays a loan off over time in level payments. Early payments are mostly interest; later ones are mostly principal.
- PITI
- PITI is principal, interest, taxes, and insurance — the four parts of a monthly mortgage payment. In Florida the taxes-and-insurance share can be large.
- Loan-to-value (LTV)
- LTV is your loan amount as a share of the home's value. A lower LTV — a bigger down payment — means less risk to the lender and often no mortgage insurance.
- Fixed-rate mortgage
- A fixed-rate mortgage keeps the same interest rate — and the same principal-and-interest payment — for the entire term, so it never changes with the market.
- Adjustable-rate mortgage (ARM)
- An ARM starts with a fixed rate for a set number of years, then adjusts periodically against an index. The early rate can be lower, but later payments can rise.
- Escrow account (impound)
- An escrow account collects part of each monthly payment to pay your property taxes and insurance when they come due, spreading big annual bills out.
Costs & fees
- Down payment
- The down payment is the cash you put toward the purchase price up front. The rest is your loan. How much you need depends on the loan program, not one fixed rule.
- Closing costs
- Closing costs are the one-time fees to set up a loan and transfer a home — lender fees, title, appraisal, recording, and prepaids — all paid at closing.
- Discount points
- Discount points are an optional upfront fee that lowers your interest rate. Whether paying them pays off depends mostly on how long you keep the loan.
- Private mortgage insurance (PMI)
- PMI protects the lender when a conventional loan's down payment is small. You pay it, it can usually be removed later, and it isn't the same as FHA MIP.
- Origination fee
- An origination fee is what a lender charges to process and underwrite your loan. It appears on your Loan Estimate and is part of comparing one offer against another.
- Prepaid items
- Prepaids are amounts collected at closing to fund your escrow account and cover the first interest, taxes, and insurance before regular payments begin.
- Earnest money
- Earnest money is a good-faith deposit made when your offer is accepted, held in escrow and applied to your costs at closing. It shows a seller you're serious.
Florida insurance
- Flood insurance
- Flood insurance is a separate policy from homeowners insurance. Whether a lender requires it depends on the property's flood zone on FEMA's current map.
- Wind mitigation inspection
- A wind mitigation inspection documents roof and construction features that resist hurricane wind. In Florida it can qualify a home for insurance premium credits.
- Four-point inspection
- A four-point inspection reports on a home's roof, electrical, plumbing, and HVAC. Florida insurers often require one on older homes before they'll write a policy.
- Citizens Property Insurance
- Citizens is Florida's state-created insurer of last resort for homeowners who can't find private coverage. Its eligibility and rules are set by the state.
- HO-6 condo policy
- An HO-6 is a condo unit owner's insurance policy, covering what's inside your walls. It sits alongside the association's master policy, and lenders often require it.
Florida property taxes
- Homestead exemption
- Florida's homestead exemption reduces the taxable value of a primary residence and unlocks the Save Our Homes assessment cap. The exact amounts are set by state law.
- Save Our Homes cap
- Save Our Homes is a Florida constitutional cap on how much a homesteaded property's assessed value can rise each year, holding long-term owners' taxes down.
- Millage rate
- A millage rate is the property-tax rate per $1,000 of taxable value. Rates are set yearly by local authorities — confirm the current figure with the Appraiser.
- Homestead portability
- Portability lets a Florida homeowner move accumulated Save Our Homes savings from an old homestead to a new one, lowering the new home's taxable value.
- CDD fee
- A Community Development District fee funds infrastructure in many newer Florida communities. It's billed with your property taxes and is separate from any HOA dues.
The loan process
- Preapproval
- A preapproval is a lender's conditional review of your finances estimating what you may borrow. It's stronger than a prequalification but isn't final approval.
- Loan Estimate
- The Loan Estimate is a standardized three-page form a lender must send after you apply. It lays out the rate, payment, and closing costs so you can compare offers.
- Closing Disclosure
- The Closing Disclosure is the final statement of your loan's terms and costs, provided at least three business days before closing so you can review it.
- Underwriting
- Underwriting is the lender's detailed review of your income, assets, credit, and the property, deciding whether — and on what conditions — the loan can be approved.
- Home appraisal
- An appraisal is an independent estimate of a home's market value, ordered by the lender to confirm the home is worth roughly what you're paying.
- Rate lock
- A rate lock holds a quoted interest rate for a set period while your loan closes, protecting you from rate moves. Locks expire and their terms vary by lender.
- Title insurance
- Title insurance protects against defects in a property's ownership history — liens, errors, or competing claims. In Florida it's a standard part of closing costs.
Credit & qualifying
- Credit score
- A credit score is a number lenders use to gauge credit risk. It shapes options and pricing, but it's one factor among income, assets, and the property.
- Debt-to-income ratio (DTI)
- DTI compares your monthly debt payments to your gross monthly income. Lenders use it to judge how much new mortgage payment your budget can reasonably support.
- Hard credit inquiry
- A hard inquiry is a lender's credit check made when you apply. Shopping several mortgage lenders in a short window generally counts as a single inquiry.
Loan programs
- Conventional loan
- A conventional loan is a mortgage not insured by a government agency, usually following Fannie Mae or Freddie Mac guidelines. It's the most common loan type.
- FHA loan
- An FHA loan is insured by the Federal Housing Administration for lower down payments and more flexible credit. It carries its own mortgage insurance (MIP).
- VA loan
- A VA loan is backed by the U.S. Department of Veterans Affairs for eligible service members, veterans, and surviving spouses, often with no down payment.
- USDA loan
- A USDA loan is a government-backed mortgage for eligible rural and suburban areas, aimed at moderate-income buyers, often with no down payment.
- Down payment assistance (DPA)
- Down payment assistance helps cover the down payment or closing costs, often as a second loan or grant. Florida runs statewide and many county options.
Common questions
Is this glossary legal or financial advice?
No. These are plain-language definitions to help you understand mortgage and Florida home-buying vocabulary. They are educational, not advice about your situation, and nothing here is an offer of credit. A licensed loan officer confirms what applies to you.
Why don't the Florida tax entries quote a rate?
Because property-tax millage is set locally each year and varies by county, so any number printed here would go stale. Those entries explain how the tax works and point you to the county Property Appraiser for the current figure.
How current is this glossary?
It is reviewed as a set and dated at the bottom of the page. Program rules, tax figures, and insurance costs change, so entries link to primary sources and tools that carry the current specifics rather than freezing a number in place.
Can I get help applying a term to my own purchase?
Yes. Each definition links to related guides and calculators, and you can talk it through with a licensed mortgage professional — no credit pull, no application, no obligation.
Put a term to work
Definitions are the easy half. Run your own numbers in the calculators, compare loan programs, or talk to a licensed mortgage professional.
Current as of August 2026.