← Learn- AMI (Area Median Income)
- The middle income for your area
- The midpoint income for households in your metro area, set each year by the government. Many programs use it to decide who qualifies — for example, "at or below 80% of AMI."
- Down payment assistance (DPA)
- Help covering the money down
- A grant or loan that helps cover your down payment and sometimes closing costs, so you need less of your own cash to buy.
- Closing costs
- The fees to finalize the purchase
- One-time fees paid when the sale closes — things like the appraisal, title work, and lender charges. Often roughly 2–5% of the price.
- Forgivable loan
- A loan that disappears over time
- Assistance structured as a loan that you never repay as long as you meet the terms — usually living in the home for a set number of years. After that, the balance is forgiven.
- Deferred loan
- A loan you repay later, not monthly
- Assistance you do not make monthly payments on. You repay it only when a trigger happens — usually when you sell, refinance, or pay off the first mortgage.
- PMI (Private Mortgage Insurance)
- Extra cost for a low down payment
- An added monthly cost lenders charge on many loans when your down payment is under 20%. It protects the lender, not you, and can often be removed later as you build equity.
- DTI (Debt-to-Income ratio)
- How much of your income goes to debt
- The share of your monthly income that goes to debt payments, including the new mortgage. Lenders use it to judge how much you can comfortably borrow.
- First-time buyer
- Usually means no home in 3 years
- For most programs, this does not mean you have literally never owned. It usually means you have not owned a home in the past three years. Targeted areas and veterans often have exceptions.
- MCC (Mortgage Credit Certificate)
- A yearly tax credit for buyers
- A certificate that lets you claim part of your mortgage interest as a federal tax credit each year, lowering your tax bill for as long as you keep the loan.
- Pre-qualification vs. pre-approval
- A guess vs. a checked estimate
- Pre-qualification is a quick, rough estimate. Pre-approval means a lender has actually reviewed your documents and credit — it carries far more weight with sellers.
- Escrow
- A neutral holding account
- Money held by a neutral third party — either during the sale, or ongoing to pay your property taxes and insurance alongside your mortgage.
- Contingency
- A safety exit in an offer
- A condition in a purchase offer that lets you back out without losing your deposit if something specific fails — like the inspection, the appraisal, or your financing.
