Buying a home is exciting—but let’s be honest, it can also feel like learning a new language. From escrow to contingencies, the real estate world is full of jargon that can overwhelm even the savviest buyers.
That’s why we’ve created this complete glossary of real estate terms. Whether you’re a first-time buyer or brushing up before your next purchase, this guide will help you understand the words and phrases you’re likely to encounter.
A–C
Appraisal
An unbiased estimate of a property’s market value, usually conducted by a licensed professional and required by lenders before approving a loan.
Amortization
The process of gradually paying off a loan through regular payments of principal and interest.
Buyer’s Agent
A real estate agent who represents the buyer’s interests in a transaction.
Closing Costs
Expenses buyers and sellers pay at closing, including lender fees, title insurance, taxes, and legal costs. Typically range from 2–5% of the purchase price.
Contingency
A condition that must be met for the purchase contract to move forward (e.g., financing approval, home inspection results).
D–H
Debt-to-Income Ratio (DTI)
A measure lenders use to assess whether you can afford a mortgage, calculated as total monthly debt payments divided by gross monthly income.
Down Payment
The amount of money a buyer pays upfront toward the purchase price of a home.
Earnest Money
A deposit made by the buyer to show good faith. Held in escrow and applied to the purchase price at closing.
Equity
The portion of a home’s value that you truly “own” (home value minus loan balance).
Escrow
A third-party account that holds funds (like earnest money) until all conditions of a transaction are met.
Fixed-Rate Mortgage
A mortgage with an interest rate that stays the same for the entire loan term.
Home Inspection
A professional evaluation of a property’s condition before purchase.
I–M
Interest Rate
The cost of borrowing money, expressed as a percentage of the loan amount.
Jumbo Loan
A mortgage that exceeds conforming loan limits set by Fannie Mae and Freddie Mac.
Listing Agent
The real estate agent who represents the seller in a transaction.
Loan-to-Value Ratio (LTV)
A measure lenders use to assess risk, calculated as loan amount ÷ property value.
Mortgage Insurance (PMI/MIP)
Insurance that protects the lender if a borrower defaults, often required when buyers put less than 20% down.
Multiple Listing Service (MLS)
A database real estate agents use to share property listings with each other.
N–S
Pre-Approval
A lender’s written offer stating how much you can borrow, based on credit, income, and assets.
Principal
The original amount of money borrowed for a mortgage (not including interest).
Property Taxes
Taxes paid to local governments, often included in your monthly mortgage payment.
Refinancing
Replacing an existing mortgage with a new one, usually to secure better terms or lower payments.
Short Sale
A home sold for less than the amount owed on the mortgage, typically requiring lender approval.
T–Z
Title Insurance
Protects buyers and lenders from claims against ownership of the property.
Underwriting
The lender’s process of evaluating risk before approving a mortgage.
VA Loan
A government-backed loan program for eligible veterans and military service members, often requiring no down payment.
Zoning
Local laws that dictate how property can be used (residential, commercial, industrial, etc.).
Final Thoughts
Understanding real estate terminology isn’t just about sounding informed—it’s about making smarter decisions. When you know the meaning behind the terms in contracts and conversations, you’ll feel more confident navigating the buying process.
👉 Pro Tip: Keep this glossary handy during your home search and refer back to it whenever you encounter confusing terms. Knowledge is one of the best tools you can bring to the table as a buyer.