How to Read a Loan Estimate: Line-by-Line Guide for Texas Homebuyers

What a Loan Estimate is (and isn't)

It's a standard federal form. Every lender uses the same layout, so you can compare two side by side (CFPB).

A few ground rules worth knowing:

• The lender has to get it to you within 3 business days of receiving your application. An "application" is six pieces of info: your name, income, Social Security number, the property address, an estimated value, and the loan amount you want (12 CFR 1026.2(a)(3), 1026.19(e)(1)).
• It isn't a contract. Getting one doesn't lock you in with that lender.
• Before you've received it and said you want to go ahead, the only fee a lender can charge you is for your credit report (1026.19(e)(2)).

Page 1: The big picture

The header

Up top: date issued, property, sale price, loan term, purpose, product, and loan type (Conventional, FHA, VA, or other). Make sure the loan type is the one you discussed.

Then find the Rate Lock line. It shows whether your rate is locked and when the lock expires. If it says NO, your rate, points, and lender credits can still change. Right below is the date your closing cost estimates expire. The lender generally has to stand behind those estimates for at least 10 business days (1026.19(e)(3)(iv)(E)).

Loan Terms

Loan amount, interest rate, and monthly principal and interest, each with a "Can this amount increase after closing?" answer. Then two lines a lot of people skip: Prepayment Penalty and Balloon Payment. Most everyday home loans say NO on both. If either says YES, the form spells out how much and when. Ask about it before you sign anything.

Projected Payments

Your payment broken out: principal and interest, mortgage insurance, and estimated escrow (property taxes and homeowner's insurance). The "In escrow?" checkboxes show which bills get paid out of your payment. HOA dues belong in the "Estimated Taxes, Insurance & Assessments" box even when they aren't escrowed (1026.37(c)).

Texas note: property taxes can be a big chunk of the payment here, so make sure the tax figure is based on the actual property, not a placeholder. Once you move in, file your homestead exemption with your county appraisal district. It's free (Texas Comptroller).

Costs at Closing

Estimated Closing Costs and Estimated Cash to Close (what you bring to the table, down payment included). Don't compare lenders on cash to close alone. Seller credits, earnest money, and financed costs all move it.

Page 2: Where the fees live

Loan Costs

• A. Origination Charges. The lender's own fees, plus any points you're paying to buy down the rate. This is the cleanest comparison between lenders. If you see points, ask what rate you'd get without them.
• B. Services You Cannot Shop For. Appraisal, credit report, flood certification. The lender picks the provider.
• C. Services You Can Shop For. In Texas this is usually title charges and the survey. Texas title insurance premiums are set by the Texas Department of Insurance, so the premium shouldn't vary between title companies, but other title fees can. Ask whether the seller has an existing survey; depending on your contract and title company, it may work with a T-47 affidavit.
• D. Total Loan Costs = A + B + C.

Other Costs

• E. Taxes and Other Government Fees. In Texas this is mostly county recording fees. Texas doesn't have a real estate transfer tax. The state constitution prohibits one (Tex. Const. art. VIII §29). If you see "transfer tax" on a Texas LE, ask what it is.
• F. Prepaids. Your first year of homeowner's insurance, prepaid interest from closing to the end of the month, and sometimes property taxes.
• G. Initial Escrow Payment at Closing. The cushion that starts your escrow account. Check the number of months listed for taxes and insurance.
• H. Other. HOA transfer fees, home warranty, and the owner's title policy, marked "(optional)." In many Texas deals the seller pays for it, but that's negotiated in your contract. One quirk: federal rules require a special calculation for the owner's policy, so the title amounts on the LE may not match the title company's separate quotes (1026.37(g)(4)).
• I. Total Other Costs = E + F + G + H.

J. Total Closing Costs and Calculating Cash to Close

J is D + I minus any lender credits. If you see a lender credit, it isn't free money. It usually comes from taking a higher rate. Calculating Cash to Close then walks from J to your cash to close: financed costs, down payment, deposit (earnest money), seller credits, and adjustments. If your seller agreed to pay some of your costs and the Seller Credits line says $0, ask why.

Page 3: The comparison page

• In 5 Years: what you'll have paid in principal, interest, mortgage insurance, and loan costs over five years, and how much went to principal. One of the best lines for comparing two offers.
• Annual Percentage Rate (APR): your costs over the full loan term, expressed as a rate. It's higher than the interest rate when fees and mortgage insurance are in the mix.
• Total Interest Percentage (TIP): total interest over the life of the loan as a percentage of the loan amount.
• Other Considerations: appraisal, assumption, homeowner's insurance, late payment, refinance, and servicing.

At the bottom you'll find the lender's and loan officer's names and NMLS IDs. You can look up anyone on NMLS Consumer Access.

What can change before closing

The LE has guardrails. The lender's own fees, transfer taxes, and services you couldn't shop for generally can't go up. Recording fees plus shoppable services from the lender's list can't go up more than 10% in total. Prepaids, escrow, and services you shop for on your own can change (1026.19(e)(3)). A revised LE is allowed when something legitimately changes, like your loan amount, the appraisal, or locking your rate. At least 3 business days before closing you'll get the Closing Disclosure. Compare it line by line against your last LE.

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By John Stafford, Loan Officer, NMLS #2470539. John Stafford NMLS #2470539 | GoRascalJohn powered by GoRascal Inc. NMLS #2072896. Licensed in Texas and Tennessee. Equal Housing Opportunity. This article is general education, not legal advice, a loan approval, or an offer of credit. Example figures are illustrations only. Last updated October 22, 2026.