Glossary and acronyms

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1% ruleInvesting

A quick screen: monthly rent should be at least 1% of the price. Rarely met in expensive markets; good for filtering, never for deciding.

A $250,000 house should rent for $2,500 a month to pass.

5/6 ARMBasics

Fixed for the first 5 years, then the rate adjusts every 6 months. Typical caps are 2/1/5: at most 2 points at the first reset, 1 at each reset after, 5 over the life of the loan. A 7/6 or 10/6 is the same idea with a longer fixed period.

The 6 is months, not years: it replaced the old 5/1 ARM (yearly resets) when the market moved from LIBOR to SOFR.

20-hour pre-licensingNMLS license

The national minimum course: 3 hours of federal law, 3 of ethics (fraud, consumer protection, fair lending), 2 of nontraditional lending and 12 of electives. Florida keeps the 20 hours but makes 2 of them Florida law, leaving 10 electives.

50% ruleInvesting

A rule of thumb that operating expenses (everything except the mortgage) run about half of rental income over time. A first guess before there are real numbers.

70% rule (MAO)Maximum allowable offerInvesting

A flipper's ceiling: 70% of the ARV minus the repairs. The other 30% pays for financing, holding, selling and profit.

ARV $300K and repairs $40K: offer no more than $170K.

1003 (URLA)Uniform Residential Loan ApplicationProcess

The standard mortgage application: the borrower, employment and income, assets, debts, real estate owned, the loan and the property, and the declarations. Investor lenders use it too, without relying on the income.

1031 exchangeInvesting

Selling an investment property and buying another to defer the capital gains tax. The clock is strict: name the replacement within 45 days and close within 180, with a qualified intermediary holding the money.

1099 and WVOE loansWritten verification of employmentQualifying

Two lighter doc types. 1099: a contractor qualifies on 1099 forms instead of tax returns. WVOE: the employer fills in a written verification of employment, with no pay stubs or W-2s.

A

Account executive (AE)How brokers work

The wholesale lender's salesperson assigned to a broker: quotes scenarios, explains guidelines and pushes stuck files through. A good AE is a broker's best tool on a hard deal.

ADRAverage daily rateInvesting

Revenue from booked nights divided by the number of nights booked. It says what guests pay per night, not how often they book.

$18,000 from 72 booked nights: the ADR is $250.

AmortizationBasics

Paying a loan down on a schedule so it reaches zero at the end. Early payments are mostly interest, later ones mostly principal. The schedule can be longer than the term, which leaves a balloon.

$300K at 7% over 30 years is about $1,996 a month; in month one, $1,750 of it is interest.

Annual continuing educationNMLS license

8 hours a year: 3 federal law, 2 ethics, 2 nontraditional lending and 1 elective, which Florida makes Florida law. Done before renewing between November 1 and December 31; the same course cannot be taken two years running.

AppraisalQualifying

A licensed appraiser's opinion of value from an inspection and comparable sales, ordered by the lender through an appraisal management company. It sets the value for the LTV and, on a DSCR loan, usually brings the rent schedule. Often the slowest part of a loan.

Appraisal waiver (value acceptance)Home loans

On some agency loans, the automated system accepts the value without a new appraisal when its data supports it. Fannie Mae calls it value acceptance; Freddie Mac's version is called ACE. Not available for 2 to 4 units, new construction or values of $1M or more.

ARM index, margin and capsBasics

After the fixed period, the rate becomes the index plus the margin. The index moves with the market (today usually 30-day average SOFR); the margin is fixed in the note. Caps limit the first change, each later change and the lifetime total, written like 2/1/5.

Index 4.30% plus margin 2.75% is 7.05%. With 2/1/5 caps on a 5% start rate, the first reset stops at 7%, and the rate can never pass 10%.

ARVAfter-repair valueBridge

What the property should be worth once the planned work is done, supported by comps of renovated homes nearby. It caps a rehab loan and drives the flip math.

ARV cap (LTARV)Loan-to-after-repair-valueBridge

The second limit on a rehab loan: the total loan cannot exceed a percentage of the ARV, typically 65 to 75%. Whichever is lower, the LTC or the ARV cap, sets the loan.

An ARV of $340K at 70% caps the loan at $238K, even if 90% LTC would allow more.

AS IS vs standard contractReal estate license

Florida's two standard purchase contracts, both from Florida Realtors and The Florida Bar, give the buyer an inspection period, 15 days by default. Under the standard contract the seller must repair up to set limits (1.5% of the price per category if left blank). Under AS IS the seller repairs nothing, and the buyer may cancel for any reason during the inspection period.

Asset depletionQualifying

Turns savings into qualifying income: eligible balances (retirement and stocks often counted at about 70%) divided over a set number of months, commonly 84 or 360 depending on the program. For people with money but little income.

$1.2M of eligible assets over 84 months is about $14,300 a month of qualifying income.

B

Balloon paymentBasics

A large lump sum due at the end of a loan whose payments never paid it off, because it amortizes over a longer schedule than its term or pays interest only. Normal on bridge and construction loans; a qualified mortgage cannot have one, with narrow exceptions.

Bank statement loanQualifying

A non-QM loan for the self-employed: income comes from 12 or 24 months of bank deposits instead of tax returns. Personal statements count deposits in full; business statements count only part of them, an expense factor that often leaves 50 to 85%.

Blanket (portfolio) loanDSCR

One loan over several rentals, usually five or more, where every property secures the whole debt. Selling one needs a partial release, often at about 120% of the loan amount allocated to that property, so the rest of the loan gets safer.

Borrower-paid compensation (BPC)How brokers work

The borrower pays the broker directly, as a fee or points at closing, and gets a lower rate. On a consumer loan the broker cannot also take the lender's pay on the same loan; some lenders allow both on business-purpose loans.

Bridge loanBridge

Short-term financing to buy or hold a property until long-term financing or a sale is in place: close fast, carry a property while it is fixed or leased up, then refinance or sell. Interest-only, 6 to 24 months, priced higher.

Bridge to DSCRBridge

The refinance in BRRRR: buy and renovate with a bridge loan, rent it out, then refinance into a 30-year DSCR loan on the new value. Mind the seasoning: some lenders waive it when refinancing their own bridge loan, others hold value to cost for the first months.

BRRRRInvesting

Buy, rehab, rent, refinance, repeat: buy a property that needs work, fix it, rent it, then refinance at the new value to pull most of the cash back out for the next one. Usually a bridge loan followed by a DSCR loan.

Business purpose and occupancy affidavitDSCR

The borrower's sworn statement on a DSCR or bridge loan that the loan is for business and that no borrower, family member or entity member will live in the property (the usual test: more than 14 days a year). A false statement is occupancy fraud and a default.

Business-purpose loanDSCR

Credit for a business or investment, such as a rental the owner will not live in. It falls outside most consumer mortgage rules (TRID, rescission, ability-to-repay), which is why DSCR and bridge lenders send a term sheet instead of a Loan Estimate.

Federal rules treat a rental as non-owner-occupied when the owner will stay there 14 days or less in the coming year.

C

Cap rateInvesting

NOI divided by price: the return if the property were bought with all cash. A higher cap rate means more income per dollar, and usually more risk. Used to compare deals and to value income property.

NOI of $24,000 on a $400,000 price: a 6% cap rate.

CapExCapital expendituresInvesting

The big, occasional replacements: roof, air conditioning, water heater, appliances, floors. Budgeted monthly as a reserve, so a $12,000 roof is not a surprise.

Cash flowInvesting

What is left each month after every expense and the full loan payment. A DSCR above 1.00 means the rent covers the debt, not that the property cash flows once cleaning, repairs and vacancies are paid.

Cash-on-cash returnInvesting

A year's pre-tax cash flow divided by the cash put in (down payment, closing costs, renovation). It measures what the investor's own dollars earn, after the loan.

$6,000 a year of cash flow on $100,000 invested is 6% cash-on-cash.

Certificate of Occupancy (CO)Process

Issued by the local building department after new construction, an addition or a change of use, confirming the building meets code for that use. It matters at the end of a build or major rehab: without a CO there is no refinance into a long-term loan.

Not the borrower's occupancy affidavit on a DSCR loan, which is a promise not to live there (see DSCR).

ClawbackHow brokers work

If a loan is paid off early, often within six months, the lender takes back the broker's compensation. One reason brokers do not refinance their own recent loans.

Clear Cooperation PolicyReal estate license

NAR's 2019 rule: once a listing is marketed publicly, it must go into the MLS within one business day. Since 2025 an MLS can also offer delayed marketing: the listing is in the MLS for agents but kept off public sites for a while, with the seller's signed consent.

Clear to close (CTC)Process

Every condition is cleared: the lender releases the closing documents and the closing can be booked. On a consumer loan, the Closing Disclosure's 3-day timing still applies.

Closing (settlement) agentProcess

The neutral party that runs the closing: collects the money, pays off liens, records the documents and pays everyone according to the settlement statement. Depending on the state, a title company, an escrow company or an attorney.

Closing Disclosure (CD)Process

The final five-page statement of a consumer loan's terms and costs, which the borrower must receive at least 3 business days before closing. It is checked against the Loan Estimate: some fees cannot rise at all, others only 10% in total.

CLTVCombined loan-to-valueBasics

Every loan on the property added together, divided by its value. Limits on HELOCs and second mortgages are set on CLTV.

A first mortgage at 70% plus a HELOC at 15% is 85% CLTV.

CMA vs BPO vs appraisalReal estate license

A CMA is an agent's comparative market analysis, to price a listing or an offer. A BPO is a broker price opinion, usually for a lender or an investor. Only a licensed or certified appraiser produces an appraisal, and a licensee must never call a CMA or BPO one.

Compensating factorsQualifying

Strengths an underwriter can weigh against a weakness: large reserves, a low LTV, a high score, long experience, documented income. On agency loans they can justify a higher DTI; on DSCR loans most limits are fixed in the matrix, so they matter mainly for exceptions.

CompsReal estate license

Comparable sales: similar nearby properties that sold recently, adjusted for differences in size, rooms, condition and lot. The basis of CMAs, appraisals and ARVs. Active and pending listings show where the market is heading; only closed sales prove value.

Conditional approvalProcess

The underwriter's approval with a list of conditions still to clear: a missing statement, a letter of explanation, an updated insurance binder, a final inspection. It is not a promise to close until every condition is signed off.

Condo milestone inspection and SIRSReal estate license

Florida's rules since Surfside: condo buildings of three or more stories need a structural milestone inspection by December 31 of the year they turn 30, then every 10 years, and a structural integrity reserve study (SIRS) every 10 years whose reserves cannot be waived. Unfunded critical repairs can leave a condo without agency financing.

Conforming vs jumboHome loans

A conforming loan fits the agencies' size limit and guidelines. For 2026 the one-unit limit is $832,750 in most counties, and up to $1,249,125 in high-cost areas. Above it is a jumbo loan, priced and underwritten by each lender.

Miami-Dade, Broward and Palm Beach use the $832,750 baseline; Monroe County (the Keys) is Florida's one high-cost county.

ContingenciesReal estate license

Conditions that let a buyer cancel and get the deposit back: inspection, financing, appraisal, the sale of another home, condo document review. Florida's standard contracts default to a 15-day inspection period and a 30-day loan approval period.

Conventional loanHome loans

Any mortgage not insured or guaranteed by the government (FHA, VA, USDA). Most are conforming loans sold to Fannie Mae or Freddie Mac; jumbo and non-QM loans are conventional too, in the broad sense.

Credit event seasoningQualifying

The time required since a foreclosure, short sale, deed-in-lieu or bankruptcy before a new loan. Agency waits are long, up to 7 years after a foreclosure; non-QM and DSCR programs may accept 1 to 4 years, at a lower LTV.

Credit tiers and the middle scoreQualifying

Lenders pull all three bureaus and use the middle score (the lower one if there are only two); with several borrowers, usually the lowest middle score. Price and maximum LTV step at tiers such as 660, 680, 700, 720, 740 and 760.

Scores of 688, 701 and 715: the qualifying score is 701.

D

Delayed financingDSCR

Buy with cash, then take a cash-out refinance within about 6 months to get the cash back without waiting out seasoning. The new loan is capped at what was documented going in: the price plus costs. It lets an investor win as a cash buyer and still end up leveraged.

Depreciation and cost segregationInvesting

Depreciation deducts a residential rental building's cost over 27.5 years. A cost segregation study splits out parts with shorter lives (5, 7 and 15 years) to deduct more sooner. Short-term rental owners who materially participate can sometimes use those losses against other income: a question for a tax advisor.

Desk review (CDA)Collateral desktop analysisQualifying

A second appraiser reviews the original report without visiting the property, checking the value and the comps. Investor lenders often require one, especially when the loan will be sold or the value looks stretched.

Doc type (the way a borrower qualifies)Qualifying

How the borrower proves they can pay: full doc (W-2s, tax returns), bank statements, a P&L, 1099s, asset depletion, or DSCR (the property's rent, no personal income at all). Choosing it is the broker's first job.

DOM vs CDOMReal estate license

Days on market counts the current listing and resets when a property is relisted. Cumulative days on market follows the property across relistings and resets only after it has been off the market for a period each MLS sets. Relisting to hide a stale listing still shows in CDOM.

Draw inspectionBridge

Before each draw, an inspector, often working from photos or video, confirms the work being billed has actually been done. Inspection fees and the days it takes are part of the cost of a rehab loan.

DSCRDebt service coverage ratioDSCR

The property's monthly rent divided by its full payment (PITIA). Investor lenders use it instead of the borrower's income: 1.00 means the rent exactly covers the payment, 1.25 means a quarter to spare.

Rent $3,000 and PITIA $2,400: the DSCR is 1.25.

DSCR refinance: rate-term vs cash-outDSCR

A rate-term refinance pays off the old loan and costs to change the rate or term; little or no cash comes out, and higher LTVs are allowed. A cash-out refinance takes equity out as cash: a lower maximum LTV (usually 70 to 75%), a higher price and seasoning rules. Both are sized on the property's DSCR.

DSCR vs DTIDSCR

DTI asks whether the borrower can afford the debt: monthly debts divided by gross income. DSCR asks whether the property can: rent divided by PITIA. Home loans live on DTI; a DSCR loan needs no pay stubs or tax returns.

A self-employed investor whose tax returns show little income can fail DTI and still qualify on a 1.30 DSCR.

DTIDebt-to-income ratioQualifying

Monthly debt payments divided by gross monthly income. Front-end counts only the housing payment; back-end adds car loans, cards, student loans and support payments. Agency loans go to about 50% with an automated approval.

$7,500 a month gross, $2,400 housing and $600 other debts: 32% front-end, 40% back-end.

DU and LPAHome loans

The agencies' automated underwriting: Desktop Underwriter (Fannie Mae) and Loan Product Advisor (Freddie Mac). They return an approval with its document list, or a referral to a human. Since November 2025, DU has no fixed 620 minimum score, though many lenders keep their own.

Dual compensationHow brokers work

Being paid by both the borrower and the lender on one loan. Banned on consumer mortgages by the loan originator compensation rule; some lenders allow it on business-purpose loans like DSCR, where that rule does not apply.

E

ECOA and Regulation BNMLS license

Bans credit discrimination by race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good-faith use of consumer credit rights. An adverse action notice is due within 30 days of a complete application, and the applicant gets a copy of the appraisal, even on a business-purpose loan.

Escrow (impounds)Basics

An account the servicer keeps to pay property taxes and insurance, filled by a slice of every payment plus a cushion at closing. An escrow waiver lets the borrower pay those bills directly, usually only at a lower LTV or for a small price.

Not the same as the closing escrow: the neutral party holding the money until a sale closes.

Escrow deposit (earnest money)Real estate license

The buyer's good-faith deposit. In Florida a sales associate hands it to the broker by the end of the next business day, and the broker puts it in escrow by the end of the third business day after receiving it. If buyer and seller both claim it, the broker must notify the Real Estate Commission within 15 business days.

Estoppel certificateReal estate license

The condo or HOA's statement of what an owner owes (dues, assessments, violations), needed to close. In Florida the association must issue it within 10 business days, it is good for 30 days (35 if mailed), and no fee may be charged if it is late.

Exit strategyBridge

How a short-term loan gets repaid: a sale, a refinance into a long-term loan (often DSCR), or one as the fallback for the other. Lenders underwrite the exit as hard as the property.

Extension feeBridge

The price of more time when a bridge loan matures before the sale or refinance: often half a point to a point for each extension of a few months. A late flip costs interest and extensions.

F

Fair Housing ActNMLS license

Bans discrimination in housing, including lending, brokering and appraising, on seven grounds: race, color, religion, sex, disability, familial status and national origin. Florida's law matches; Miami-Dade adds more, including source of income. Not to be confused with an FHA loan.

Fannie Mae and Freddie MacHome loans

The two government-sponsored enterprises that buy conforming mortgages from lenders and turn them into securities, which sends money back to lenders to lend again. Their guidelines and their automated underwriting define a conventional conforming loan.

FCRAFair Credit Reporting ActNMLS license

Governs credit reports: when one may be pulled, disputes and notices. When a report leads to a denial or worse terms, the notice gives the score and its key factors, the bureau's contact details, and the right to a free report within 60 days.

FHA loanHome loans

Insured by the Federal Housing Administration, for a home the borrower will live in: 3.5% down with a 580+ score, 10% down from 500 to 579. Mortgage insurance is 1.75% up front plus a yearly premium, kept for the life of the loan when less than 10% is put down.

2026 FHA limits start at $541,287 for one unit.

Fix and flipBridge

Buy, renovate and sell within months. The lender funds most of the purchase and usually most or all of the renovation in draws, caps the loan against the after-repair value, and looks hard at the investor's experience and the budget.

Fixed vs adjustable rateBasics

A fixed rate never changes for the life of the loan. An adjustable rate (ARM) is fixed for an opening period, then resets on a schedule to an index plus a margin, within caps. ARMs usually start lower; a fixed rate buys certainty.

Planning to sell or refinance within 5 years? A 5/6 ARM can cost less than paying for 30 years of certainty.

Florida brokerage relationshipsReal estate license

Three are allowed: transaction broker (the default, presumed unless agreed otherwise, with limited representation), single agent (full duty to one side) and no brokerage relationship. Dual agency is not allowed. Switching from single agent to transaction broker needs the client's written consent.

Form 1007 (rent schedule)DSCR

The appraiser's comparable rent schedule for a single-family rental: market rent backed by rental comps, ordered with the appraisal on a DSCR loan. Form 1025 does the same for 2 to 4 units. It was built for long-term rent, so some lenders want a separate short-term rental analysis.

Full docQualifying

Income proven the traditional way: pay stubs and W-2s, two years of tax returns for the self-employed, and a verification of employment. The best pricing, and the only way into agency and government loans.

Funding vs disbursementProcess

Funding is the lender wiring the loan money to the closing agent. Disbursement is the closing agent paying everyone from it: the seller, the old lender, the fees. In most states money moves at or right after signing; a few western states allow funding days later.

G

Gap fundingBridge

A second loan, usually private, covering what the main lender will not: part of the down payment or the closing costs. Expensive, and risky, because a project with none of the investor's own money in it has no cushion. Many first lenders forbid it.

Gift fundsQualifying

Money from a relative toward the down payment, documented with a signed gift letter (no repayment expected) and the transfer itself. Common on home loans; many investment and DSCR programs limit or refuse gifts.

GLBAGramm-Leach-Bliley ActNMLS license

Privacy notices on how a consumer's personal information is shared, and the Safeguards Rule for protecting it. A non-bank lender must tell the FTC within 30 days of a breach affecting 500 or more people.

GRMGross rent multiplierInvesting

Price divided by gross annual rent. The lower it is, the cheaper the property relative to its income. A rough comparison that ignores expenses.

A $300,000 price and $30,000 a year of rent: a GRM of 10.

Ground-up constructionBridge

A loan to build from the land up: it funds or credits the land and pays the construction budget in draws, with a licensed general contractor, plans, permits and a budget. Riskier than a flip, so less leverage and more scrutiny; it ends with a certificate of occupancy.

H

Haircut on projected incomeDSCR

The discount a lender applies to projected short-term rental revenue before dividing by PITIA, usually 20 to 30%. Some give experienced hosts full credit.

$60,000 projected a year, at 80%, counts as $4,000 a month in the ratio, not $5,000.

Hard moneyBridge

Short-term loans made mainly on the property's value, the hard asset, rather than the borrower's income, at higher rates and points, and fast to close. The street term for local asset-based lenders.

Hard money vs RTL: is there a difference?Bridge

Mostly vocabulary. Hard money is the older street term for local, asset-based, expensive lenders; RTL is what the capital markets call the same short-term, interest-only investor loans now that national platforms make them to a standard and sell them. Hard money can also mean land or commercial loans, which are not RTLs.

HELOCHome equity line of creditHome loans

A revolving line secured by the equity in a home, used like a credit card: borrow, repay, borrow again, usually at a variable rate. Lenders typically allow a combined LTV of 80 to 90% on a primary home. It is a second lien behind the first mortgage.

HELOC draw vs repayment periodHome loans

During the draw period, often 10 years, the borrower can draw and may pay interest only. Then the repayment period, often 10 to 20 years, begins: no more draws, principal plus interest due, and the payment jumps.

HMDAHome Mortgage Disclosure ActNMLS license

Makes lenders report their application data every year by March 1, so regulators can see lending patterns and spot discrimination. Business-purpose loans are reported when they buy, refinance or improve a dwelling, so most DSCR loans count.

Home equity loan vs HELOCHome loans

A home equity loan pays out a lump sum at a fixed rate, with fixed payments. A HELOC is a line drawn as needed, at a variable rate. Both are second liens; a cash-out refinance instead replaces the first mortgage.

House hackingInvesting

Living in part of a property and renting the rest: a duplex to fourplex, a basement, a spare room. The investor gets home-loan financing (as little as 3.5% down with FHA) while tenants cover much of the payment.

Housing history (1x30x12)Qualifying

Late payments on mortgages and rent, written as count x days late x months: 1x30x12 means no more than one payment 30 days late in the last 12 months. Each tier of a program sets its own limit, and a clean 0x30x12 gets the best price.

I

IDX and syndicationReal estate license

IDX (internet data exchange) lets brokers show other brokers' MLS listings on their own websites. Syndication pushes listings out to the big portals. Both draw on the MLS, which is why it is the source of truth.

Interest-only (IO)Basics

For a set period, often 10 years on an investor loan, the payment covers interest only, so the balance does not go down. After that the loan amortizes over the years left, and the payment jumps. Investors use IO to raise monthly cash flow.

$300K at 7.5%: $1,875 a month interest-only, against about $2,098 fully amortizing over 30 years.

Is 85% cash-out a thing?DSCR

Not on DSCR loans. Cash-out usually tops out at 70 to 75% LTV, and 80% only at the top tier (around a 740 score, smaller loans). 85% shows up elsewhere: as a top DSCR purchase LTV, and as the combined LTV some HELOCs allow on a primary home.

On an agency investment loan, cash-out stops at 75% for one unit and 70% for two to four.

ITIADSCR

On an interest-only loan, many lenders compute the DSCR on the interest-only payment plus taxes, insurance and HOA dues, instead of PITIA. The smaller payment lifts the ratio, one reason investors choose interest-only.

L

Lender creditBasics

The reverse of points: take a rate above par and the lender pays part of the closing costs. The same rate sheet prices both directions.

Par is 7.0%. At 7.25% the lender might credit 1% of the loan toward the borrower's costs.

Lender-paid compensation (LPC)How brokers work

The lender pays the broker out of the loan's premium pricing, as a fixed percentage set in the broker's agreement, often between 1% and 2.75%. The borrower takes a slightly higher rate instead of paying a fee.

Lender's vs owner's title policyProcess

One premium at closing insures against title problems from before the sale. The lender's policy protects the loan and is required; the owner's policy protects the buyer's equity and is optional. Who pays is negotiable and follows local custom.

In Miami-Dade the buyer customarily pays for the owner's policy; in much of the rest of Florida the seller does.

Lien positionBasics

The order lenders are paid from a sale or foreclosure, generally set by when each lien was recorded. The first lien is paid in full before the second sees anything, which is why second liens cost more.

A $300K first mortgage and a $50K HELOC on a house that sells for $320K: the first is paid in full, the HELOC gets $20K.

Listing agreement typesReal estate license

Exclusive right of sale: the listing broker is paid whoever sells, even the owner. Exclusive agency: paid unless the owner finds the buyer. Open: only the broker who brings the buyer is paid. In Florida a written listing needs a definite end date, the price and terms, and the fee, and cannot renew itself.

LLPALoan-level price adjustmentHome loans

The agencies' upfront risk fees, charged in points by credit score, LTV, occupancy, property type and purpose. They are why an investment property or a cash-out costs more than a primary-home purchase at the same score.

Loan Estimate (LE)Process

The standard three-page disclosure due within 3 business days of a consumer application: rate, payment, closing costs and cash to close. An application exists once six facts are in: name, income, Social Security number, property address, estimated value and loan amount.

Loan originator compensation ruleNMLS license

Under Regulation Z an originator's pay cannot depend on a loan's terms (its rate or product) or a stand-in for them; pay by volume or a flat amount is fine. No dual compensation. Against steering, show the lowest rate, the lowest rate without risky features, and the lowest points and fees, for each loan type.

LOELetter of explanationQualifying

A short signed statement the underwriter asks for to explain something in the file: a credit inquiry, a large deposit, a gap in employment, a different address. Factual and brief is best.

Long-term rental incomeDSCR

For a property let on 12-month leases, the DSCR uses the lease in place or, without one, the appraiser's market rent. Many lenders take the lower of the two, or accept a lease only up to a cap above market rent. On a purchase, market rent is usually all there is.

LTCLoan-to-costBridge

The loan divided by the project's total cost: the purchase price plus the renovation budget. Bridge lenders size on LTC and also cap the loan against the after-repair value; the lower of the two wins.

Price $200K plus rehab $50K is $250K of cost. At 85% LTC the loan is $212,500, if the ARV cap allows it.

LTVLoan-to-valueBasics

The loan divided by the property's value; on a purchase, the lower of the price and the appraised value. It is the main dial on risk and price: the lower it is, the better the rate and the more lenders will do the loan.

A $240K loan on a $300K purchase is 80% LTV: the investor brings 20% down.

M

MLOMortgage loan originatorNMLS license

Someone who takes a residential mortgage application, or offers or negotiates its terms, for pay. Needs a state license through NMLS, or a federal registration when employed by a bank or credit union.

MLSMultiple Listing ServiceReal estate license

The private database where brokers share their listings: price, details, photos, showing instructions and status. Access comes with membership, usually by joining the local Realtor association through your broker. Public sites draw their listings from it.

MLS statusesReal estate license

Active (for sale), Active Under Contract (under contract, still taking backup offers), Pending (under contract, no longer marketed), Closed, Withdrawn, Expired, Canceled, Coming Soon, and Hold (temporarily off the market). Back on Market describes a change, not a status of its own.

Mortgage broker vs direct lenderHow brokers work

A broker finds the right lender and loan and runs the file, but the loan closes in the lender's name with the lender's money. A direct lender underwrites and funds itself. GoDoor is a broker: the value is shopping many lenders and running the process.

Mortgage vs deed of trustBasics

Both pledge the property as security for the note. A mortgage is between borrower and lender and usually needs a court to foreclose; a deed of trust adds a neutral trustee and usually allows a faster foreclosure without a court. The state decides which is used.

Florida uses mortgages and forecloses through the courts. Texas and California use deeds of trust.

N

NMLSNationwide Multistate Licensing SystemNMLS license

The system every state uses to license mortgage companies and loan originators. Each licensee gets an NMLS ID that must appear on loan documents, ads and business cards; anyone can look it up on NMLS Consumer Access.

NOINet operating incomeInvesting

Rental income minus operating expenses (taxes, insurance, utilities, management, cleaning, repairs), before the mortgage. The basis of the cap rate.

Non-QMHome loans

Mortgages outside the qualified mortgage rules: bank statement, asset depletion, interest-only and other alternative-document loans. A consumer non-QM loan must still pass ability-to-repay; a business-purpose DSCR loan sits outside those rules altogether. Priced higher, and sold to private investors.

O

Occupancy fraudNMLS license

Misstating how a property will be used to get better terms: calling a rental a primary home or, on a DSCR loan, planning to live in it. It is mortgage fraud and lets the lender call the loan. Florida law also forbids dressing a consumer home loan up as a business-purpose loan.

Occupancy rateInvesting

Booked nights divided by available nights. Lenders that accept projections often want a minimum, around 60 to 65%.

65% occupancy is about 237 nights a year.

Offers of compensationReal estate license

Since the NAR settlement, MLS listings cannot carry offers to pay the buyer's broker. A seller can still agree to pay off the MLS or as part of the deal, and concessions to the buyer can still appear in the MLS.

OO, NOO and second homeQualifying

Owner-occupied (OO): the borrower's main home, the best pricing, consumer rules apply. Second home: the borrower's own occasional use, one unit, limited renting. Non-owner-occupied (NOO): an investment property, priced higher, and where DSCR loans live.

Calling a rental a second home to get a better rate is occupancy fraud.

P

P&L loanProfit and loss statementQualifying

Income taken from a profit and loss statement prepared or signed by a CPA, enrolled agent or tax preparer, usually backed by two months of bank statements. For business owners whose tax returns show less than they earn.

Par, premium and discountHow brokers work

Par is the rate that costs no points. Below par the borrower pays points (discount). Above par the lender pays a premium, which funds lender credits or the broker's pay.

Personal guarantee and recourseDSCR

Most DSCR and bridge loans are full recourse: the owners of the borrowing LLC (often anyone with 20 to 25% or more) personally guarantee the debt, so the lender can come after them beyond the property. Non-recourse is mostly found on large portfolio loans.

PITI and PITIABasics

The whole monthly housing payment: principal, interest, taxes and insurance, plus association (HOA) dues for PITIA. Investor lenders divide rent by PITIA, so taxes, insurance and HOA dues matter as much as the rate.

P&I $1,996, taxes $275, insurance $125, no HOA: PITIA is $2,396.

PMI, and when it endsHome loans

Private mortgage insurance protects the lender on a conventional loan with less than 20% down. On a primary home the borrower can ask to cancel it at 80% of the original value, and it ends on its own at 78% on schedule. FHA insurance follows its own rules.

PointsBasics

One point is 1% of the loan amount, paid at closing. Discount points buy the rate down, each typically by about 0.25 to 0.5% (it varies); origination points pay the lender or broker. Points only pay off if the loan is kept long enough.

1 point on a $400K loan is $4,000. If it saves $70 a month, breaking even takes about 57 months.

Pre-qualification vs pre-approvalProcess

A pre-qualification is a quick estimate from what the borrower says. A pre-approval follows a credit pull and a document review, and carries weight with sellers. Neither is a commitment: the property still has to appraise and the file still has to clear underwriting.

Prepayment penalty (PPP)DSCR

A fee for paying the loan off early, by sale or refinance, usually within the first 1 to 5 years. It protects whoever bought the loan, and the borrower gets a lower rate for accepting it. Standard on DSCR loans; home loans on a primary residence mostly cannot have one.

Prepayment penalty state limitsDSCR

Some states ban or cap prepayment penalties even on investment loans, and each lender keeps its own list, so always check the lender's state matrix. Kansas, Minnesota and New Mexico are on most no-penalty lists. In New Jersey some lenders allow one only when the borrower is a corporation.

Prepayment penalty structuresDSCR

Step-down: the fee falls each year, written as the percent per year (5-4-3-2-1, 3-2-1). Flat: the same percent throughout (3% or 5%). Months of interest: for example six months' interest on whatever is prepaid above 20% of the balance. Yield maintenance: the lender's lost interest, mostly on portfolio loans.

Sell in year 2 of a $400K loan with a 5-4-3-2-1: the fee is 4% of the balance, roughly $16,000.

Pricing engine and scenario deskHow brokers work

A pricing engine runs one scenario (score, LTV, DSCR, loan size, property, prepayment penalty) against many lenders' rate sheets at once. A scenario desk is the lender's team that answers what the matrix does not.

Private moneyBridge

Loans funded by individuals or private funds rather than a bank, usually short-term and secured by the property, on negotiated terms. Anything from a friend lending on a flip to a private credit fund. Mostly business purpose, so consumer mortgage rules rarely apply.

Private vs non-QM lenderBridge

A non-QM lender is a licensed mortgage lender making loans outside the qualified mortgage rules (bank statements, DSCR, interest-only) to published guidelines, and selling them to investors. A private lender lends private capital, mostly short-term and asset-based. Both can offer DSCR; a consumer non-QM loan must still pass ability-to-repay.

ProcessingProcess

Turning an application into a complete file: collecting and checking documents, ordering the appraisal, title and insurance, verifying assets, and submitting to underwriting. The processor chases the paper so the underwriter can decide.

Promissory noteBasics

The borrower's written promise to repay: the amount, rate, term, payment and what counts as a default. It is the debt itself; the mortgage or deed of trust is what ties it to the property.

At closing the borrower signs both: the note (the IOU) and the mortgage (the lien that secures it).

PTD and PTF conditionsProcess

Prior to docs (PTD): must be cleared before the closing documents are drawn. Prior to funding (PTF): can be signed at closing but must be cleared before the money moves, like a final verification.

Q

QM and ability-to-repayHome loans

Ability-to-repay makes lenders weigh eight factors on a home loan, including income or assets, the payment, debts, DTI and credit. A qualified mortgage (QM) also meets stricter terms (no interest-only, no negative amortization, no balloon, 30 years at most, points and fees capped near 3%) and gets legal protection. Since 2021 the QM test is price-based, not a 43% DTI cap.

R

Rate lockBasics

The lender's promise to hold a rate and price for a set time, commonly 30 to 60 days. If the loan does not close in time, extending the lock costs money.

Rate sheetHow brokers work

The lender's daily price list: for each program and rate, a price in points (a cost or a credit), plus adjustments for score, LTV, DSCR, loan size, property type, prepayment penalty and more. Prices move with the market, sometimes within a day.

Rate vs APRBasics

The note rate sets the payment. The APR adds the cost of credit (points, most lender fees, mortgage insurance) spread over the term, so offers can be compared like for like. A low rate bought with points shows up as a higher APR.

6.5% with 2 points paid up front works out to an APR of about 6.7%.

REALTOR vs licenseeReal estate license

Anyone who passes the state exam is a licensee (in Florida, a sales associate or a broker). A REALTOR is a licensee who joins the National Association of Realtors and a local association and follows its Code of Ethics. MLS access usually runs through that membership.

RecordingProcess

Filing the deed and the mortgage with the county, so the transfer and the lien are public and take their place in line. The title company records right after closing; until then, the lender's priority is exposed.

Rehab holdback and drawsBridge

The lender keeps the renovation money back at closing and releases it in draws as the work is done, usually after the fact: the investor pays first, then is reimbursed. Plan for a 10 to 20% contingency on top.

Rental arbitrageInvesting

Leasing a property long-term and subletting it short-term, with the landlord's permission. No purchase and no mortgage, but thin margins, lease risk and local rules.

REO: two meaningsReal estate ownedQualifying

1. A property a lender took back in foreclosure and now sells (bank-owned). 2. On a loan application, the schedule of real estate owned: every property the borrower already owns, with its loans, payments and rents. Investors with portfolios meet the second one on every deal.

ReservesDSCR

Cash left after closing, counted in months of PITIA: commonly 2 to 12, by loan size, DSCR and experience. Retirement and brokerage accounts usually count at a discount. Sub-1.0 DSCR files and first-time investors are asked for more.

RESPA Section 8NMLS license

Bans kickbacks and referral fees for settlement services, and splitting a fee where no real work was done. Paying fair value for actual goods or services is allowed. Penalties reach $10,000 and a year in prison, plus three times the charge in damages.

Retail vs wholesale vs correspondentHome loans

Retail: the lender's own loan officers work with the borrower. Wholesale: independent brokers bring borrowers to the lender, which underwrites and funds. Correspondent: a smaller lender funds the loan itself, then sells it to a larger one.

RevPARRevenue per available rental nightInvesting

Revenue divided by available nights, which is ADR times occupancy. The single number for comparing listings or markets, because it rewards both price and demand.

ADR $250 at 65% occupancy: RevPAR is $162.50.

Right of rescissionProcess

On a refinance or home equity loan secured by the borrower's main home, the borrower can cancel until midnight of the third business day after closing (Sundays and federal holidays do not count), and the loan funds only after that. The rescission notice explains the right. It does not apply to purchases or to investment and business-purpose loans.

Sign a cash-out refinance on your own home on Monday: the window runs Tuesday to Thursday, and the loan funds on Friday.

RTLResidential transition loanBridge

The capital markets name for short-term investor loans on homes: fix-and-flip, bridge and ground-up construction, usually 12 to 36 months, interest-only, repaid by a sale or a refinance. Loan buyers and rating agencies say RTL; borrowers mostly say hard money or bridge.

S

SAFE ActNMLS license

The 2008 federal law that set minimum standards for loan originators: NMLS registration, pre-licensing education, a national test, a background check and credit report, and yearly continuing education. It disqualifies anyone with a felony in the 7 years before applying, a fraud-type felony ever, or a revoked originator license.

SAFE MLO TestNMLS license

The national exam, with its Uniform State Test: 120 questions (115 scored), 190 minutes, 75% to pass. Weights: federal law 24%, uniform state content 11%, general mortgage knowledge 20%, origination activities 27%, ethics 18%. After a fail, wait 30 days; after every third, 180.

Sales associate vs brokerReal estate license

In Florida a new licensee is a sales associate and must work under a broker, who holds the escrow money and answers for the associate. A broker license takes 24 months as an active sales associate within the last 5 years, a 72-hour course and another exam.

Scope of work (SOW)Bridge

The line-item renovation budget the lender reviews before closing: what will be done, by whom, and what each item costs. It sets the rehab holdback and the draw schedule. A padded or thin one is a red flag.

SeasoningDSCR

How long something has existed before the lender will rely on it. Title seasoning: time owned before a cash-out refinance can use the new appraised value (6 months is common on DSCR; before that, value is capped at cost plus documented work). Also funds seasoning, and time since a credit event.

Bought for $200K, put $40K in, appraised at $320K after 3 months: many lenders size the cash-out on the $240K, not the $320K.

Secondary marketHow brokers work

Where loans are sold after closing: to Fannie Mae and Freddie Mac, to banks, or to investors who pool them into securities. Most lenders do not keep their loans, so their guidelines are really their buyers' guidelines.

SecuritizationHow brokers work

Pooling many loans and selling bonds paid by their payments. Agency mortgage-backed securities carry the agencies' guarantee; non-QM, DSCR and RTL loans go into private-label securitizations graded by rating agencies.

Seller concessionsHome loans

Seller money toward the buyer's closing costs. Agency limits: 3% of the price with under 10% down, 6% with 10 to 25% down, 9% above that, and 2% on any investment property. Anything over the limit is taken off the price.

A $400K home with 5% down: the seller can pay up to $12,000 of the buyer's costs.

Settlement statementProcess

The line-by-line account of who pays what at closing: price, loan, credits, payoffs, fees, and cash to or from each side. Consumer loans use the Closing Disclosure; business-purpose loans use an ALTA settlement statement or the older HUD-1.

Short-term rental insuranceProcess

A homeowner's policy assumes the owner lives there, and a landlord policy assumes long-term tenants; a short-term rental needs a policy or endorsement that covers paying guests, with real liability cover. The lender wants the right one in place, naming it, before closing.

Short-term rental rulesInvesting

Cities and HOAs regulate short-term rentals: permits, caps on permits, owner-occupancy requirements, minimum stays and taxes. Check the zoning, the city and the HOA before buying; a ban can erase the income a DSCR loan was sized on.

SOFRSecured Overnight Financing RateBasics

The benchmark most new US adjustable-rate loans follow, published daily by the New York Fed from overnight loans backed by Treasuries. It replaced LIBOR, which agency ARMs stopped using in 2021.

Sourced and seasoned fundsQualifying

The down payment and reserves must be traceable (sourced) and have sat in the account long enough (seasoned), usually two months of statements. A large deposit that is not payroll needs a paper trail or an explanation.

A $25,000 transfer last month needs the statement from the account it came from, or a gift letter.

SponsorshipNMLS license

A license is not active until a licensed company sponsors the originator in NMLS for that state. Florida lets an originator work for only one licensed broker or lender at a time. Temporary authority lets someone moving from a bank, or licensed in another state, originate for up to 120 days while the application is pending.

STR vs MTR vs LTRInvesting

Short-term rental: stays under 30 days, furnished, run like a small hotel. Mid-term: furnished stays of one to twelve months, for travel nurses and relocations. Long-term: unfurnished, 12-month leases. Revenue, costs, rules and financing all differ.

Sub-1.0 and no-ratio DSCRDSCR

Some programs go below 1.00 (often to 0.75) or skip the ratio entirely, at a price: a lower maximum LTV (around 65 to 75%), a higher credit score, more reserves and a higher rate. Useful where rents lag prices.

No-ratio deals often want 30 to 35% down, a 700+ score and a year of reserves.

T

Term sheetHow brokers work

A non-binding summary of a proposed loan: amount, rate, term, LTV, fees, prepayment penalty, reserves and conditions. Business-purpose lenders issue one instead of a Loan Estimate.

In GoDoor, Term sheets is its own section, between the quote and the application.

The 10-property capHome loans

Fannie Mae allows a borrower up to 10 financed properties, the home included, and wants more reserves as the count grows. Investors past that move to DSCR or portfolio lenders, which have no such cap.

The Florida license pathReal estate license

Be 18 with a high school diploma, take the 63-hour pre-licensing course, then pass the state exam (100 questions, 75 to pass). The license is issued inactive until a broker activates it. Then 45 hours of post-licensing before the first renewal, or the license becomes void, and 14 hours of continuing education every 2 years after that.

The order of a loanProcess

Application, then disclosures or a term sheet, processing (documents gathered, appraisal and title ordered), underwriting, conditional approval, clearing conditions, clear to close, closing, funding, recording. The appraisal is ordered early but often arrives last, so it sets the pace.

In GoDoor: Quotes, then Term sheets, then the Deals board: Application, Underwriting, Closing.

TILA and Regulation ZNMLS license

The Truth in Lending Act, carried out by Regulation Z: disclosure of the cost of credit (APR, finance charge) plus the rules on rescission, ability-to-repay, high-cost loans and originator pay. Consumer credit only; business-purpose loans are exempt.

Title search and commitmentProcess

The title company searches public records for the chain of ownership, liens, judgments and easements, then issues a commitment: what it will insure, what must be cleared first (requirements) and what it will not cover (exceptions).

TRIDTILA-RESPA Integrated DisclosureProcess

The rule behind the Loan Estimate and Closing Disclosure on most consumer mortgages. After the CD, only three changes restart the 3-day wait: the APR becomes inaccurate, the loan product changes, or a prepayment penalty is added. DSCR and bridge loans are outside it.

TurnkeyInvesting

A renovated, rent-ready (often already rented) property sold to investors, sometimes with management in place. Convenient for buyers out of state; the convenience is paid for in the price.

U

UDAAPNMLS license

Unfair, deceptive or abusive acts or practices in consumer finance, enforced by the CFPB. A broad standard that reaches ads, disclosures and sales conduct beyond any specific rule.

UnderwritingQualifying

The lender's review of risk before it approves: the borrower (credit, assets, income or DSCR), the property (appraisal, title, insurance) and the deal (LTV, purpose). The underwriter issues conditions, and the loan is approved when they are cleared.

On a short-term rental, underwriting also settles the income method: history, a projection or market rent.

USDA loanHome loans

No-money-down loans for a primary home in an eligible rural area, for households earning up to 115% of the area median income. The guarantee costs 1% up front and 0.35% a year.

V

VA loanHome loans

Guaranteed by the Department of Veterans Affairs for eligible veterans and service members: no down payment, no monthly mortgage insurance, primary home only. A one-time funding fee (2.15% for a first use with under 5% down) applies unless the borrower is exempt, for example with a service-connected disability.

Eligibility is proven with a Certificate of Eligibility (COE).

Vesting: personally or in an entityDSCR

Whose name goes on the title and the loan. DSCR loans close in a person's name or in an LLC or corporation; an entity brings its articles, operating agreement, EIN letter and a certificate of good standing, and its owners sign a personal guarantee. An LLC adds liability separation, not a better rate.

Some lenders require an entity in certain states, and some cap an LLC at about four members.

W

Warehouse line and table fundingHow brokers work

A warehouse line is the short-term credit a lender uses to fund loans until it sells them. Table funding is when a loan closes in the broker's name but is funded at the table by a lender that takes it over at once.

What a DSCR loan is exempt fromNMLS license

Off the table for a business-purpose loan on a rental: TILA and Regulation Z (TRID, rescission, ability-to-repay, originator pay rules), RESPA, federal SAFE Act licensing, and PMI cancellation. Still on: ECOA (with the appraisal copy), the Fair Housing Act, HMDA reporting, and state licensing law.

What unlocks a higher LTVDSCR

DSCR leverage comes in tiers on the lender's matrix: credit score (often 700 or 740 for the top tier), DSCR (1.00 vs 1.25), experience, loan size, property type and purpose. Moving up one box is how 75% becomes 80%. Big reserves or documented income can help a file on the edge.

Who does what on a loanHow brokers work

Loan officer: finds the borrower and the right loan. Processor: builds the file. Underwriter: decides. Closer: prepares the closing documents and funds the loan. On a brokered loan, the loan officer and processor are the broker's; underwriting and closing are the lender's.

Wire fraudProcess

The most common closing scam: an email, often from a hacked agent or title account, sends new wiring instructions. Confirm wire instructions by phone, on a number you already had, never one from the email.

Written buyer agreementReal estate license

Since August 17, 2024 (the NAR settlement), a Realtor working with a buyer needs a signed agreement before touring a home. It must state the fee as a set amount or rate, not a range, stop the agent collecting more from any source, and say fees are negotiable. Chatting at an open house needs none.