A Loan Estimate is the three-page federal form that shows your FHA loan’s interest rate, monthly payment, and closing costs, and you can read it in about ten minutes once you know where each number lives. This loan estimate form breakdown covers the form page by page, with extra attention to the FHA-specific lines that generic guides skip.
The most important of those lines is mortgage insurance. FHA loans carry an upfront premium (UFMIP) and an annual premium (MIP), and they show up in different places on the form. Knowing which is which is the fastest way to tell whether an estimate is accurate and whether it is the best one on your desk.
Delivery Deadlines, Legal Limits, and Who Issues the Form
Under the CFPB’s TRID rule (the TILA-RESPA Integrated Disclosure rule), a Loan Estimate must reach you within three business days of the lender receiving your application. An application counts as received once six pieces of information are in: your name, income, Social Security number, the property address, an estimated property value, and the loan amount you want. The CFPB explains the form and the timing on its Loan Estimate page.
The form is an estimate, not a commitment to lend. Even so, certain fees are legally limited from rising, and those limits are covered in the Page 2 section below. The Loan Estimate replaced the old Good Faith Estimate, and it is a separate document from the Closing Disclosure you receive shortly before closing.
Receiving a Loan Estimate does not obligate you to proceed. Before a lender can charge you any fee other than a credit report fee, you must indicate that you intend to move forward. You can collect several estimates and walk away from all of them without cost beyond that credit report.
Duane Buziak is a mortgage broker, not a lender. When a broker originates your loan, the Loan Estimate is typically issued under the name of the wholesale lender funding it, and the broker’s compensation is disclosed on the form itself, in the origination charges on Page 2. That disclosure is a feature: you can see exactly what the broker is paid, then compare it to what other originators charge.
Page 1: Loan Terms, Projected Payments, and Cash to Close
The top of Page 1 lists the loan amount, term, interest rate, and loan type (check that FHA is marked). Below it are three Yes/No boxes under the question of whether key terms can change after closing. They cover whether the interest rate can rise, whether the loan balance can increase, and whether the loan has a prepayment penalty or balloon payment. A standard fixed-rate FHA loan should show “No” for all of them. FHA loans do not carry prepayment penalties, so a “Yes” there deserves an immediate question.
The Projected Payments box breaks your monthly payment into principal and interest, mortgage insurance, and estimated escrow. For an FHA loan, the mortgage insurance line is the annual MIP, billed monthly. The estimated escrow line covers property taxes, homeowner’s insurance, and similar items, and the box adds them into a single estimated total monthly payment.
Illustrative Henrico County example
Suppose you buy a home in Henrico County, VA for about $310,900 with 3.5% down, producing a $300,000 base loan. The 1.75% UFMIP is $5,250, financed into the loan, so the loan amount on the form reads $305,250. Because your loan-to-value is above 95%, the annual MIP on a 30-year loan up to $726,200 is 0.55% (HUD Mortgagee Letter 2023-05; confirm against HUD Handbook 4000.1 for your tier). Assume a 6.25% rate, chosen only for illustration.
- Principal and interest: about $1,879 on $305,250 over 30 years
- Mortgage insurance: 0.55% of $300,000 is $1,650 a year, or about $138 a month
- Property tax: Henrico’s $0.85 per $100 rate (confirm the current figure at henrico.us) on $310,900 is about $3,173 a year, or about $264 a month
- Homeowner’s insurance: assumed at $125 a month
- Estimated total: about $2,406 a month
Real assessments, insurance quotes, and rates will differ. The point is to see how each piece lands in the box. Because UFMIP is financed, your loan amount can exceed the price minus your down payment. That is normal, not an error. The Estimated Cash to Close figure at the bottom of Page 1 pulls from the totals on Page 2.
Page 2: Closing Cost Sections A Through J
Page 2 itemizes every cost. Section A holds origination charges: the broker’s compensation, points, and any underwriting or processing fees. Section B lists services you cannot shop for, such as the appraisal and credit report. Section C lists services you can shop for, like title insurance and settlement services. Section D totals A, B, and C.
Section E covers taxes and government fees, mainly recording fees and any transfer taxes. Section F lists prepaids: interest from closing to month-end, the first homeowner’s insurance premium, and any upfront property tax. Section G is the initial escrow deposit that seeds your tax and insurance account. Section H holds other items, and Section I totals E through H. Section J combines everything into total closing costs and subtracts any lender credits.
Where FHA items land
The FHA appraisal and the FHA case number fee typically appear in Section B. The UFMIP is displayed differently depending on the lender’s form format and whether it is financed, so if you cannot find it, ask. The annual MIP is not a closing cost at all. It belongs in the monthly Projected Payments box on Page 1.
Tolerance categories
The CFPB sorts fees into three groups based on how much they may rise before closing:
- Zero tolerance: origination charges, transfer taxes, and Section B services. These cannot increase without a valid reason.
- 10% cumulative: recording fees and Section C services when you choose a provider from the lender’s list. Together they may rise by no more than 10%.
- No limit: prepaids, initial escrow deposits, and services you choose from outside the lender’s list.
Credits in Section J
Seller concessions and lender credits reduce your cash to close and appear in Section J. FHA generally caps seller concessions at 6% of the sales price (confirm the current limit in HUD Handbook 4000.1). Duane Buziak structures no-out-of-pocket closing options by combining seller credits and lender credits where the numbers support it, but the credit must be visible on the form.
Page 3: Comparisons, APR, and Other Considerations
The Comparisons box gives two five-year figures: the total you will have paid in principal, interest, mortgage insurance, and loan costs, and the principal you will have paid down. These let you weigh a lower rate paired with higher fees against a higher rate with lower fees. If you expect to stay in the home for several years, the five-year total is often more revealing than the rate.
The APR (annual percentage rate) folds certain loan costs into a yearly rate, so it is always higher than the note rate. On FHA loans the gap is wider because mortgage insurance premiums are part of the calculation. Do not read that as a sign of a bad deal; compare APR to APR across FHA estimates, not to a different loan type. The Total Interest Percentage (TIP) shows the interest you will pay over the loan’s life as a percentage of the loan amount.
The Other Considerations section covers practical points:
- Appraisal: you have the right to a copy of the appraisal report.
- Assumption: FHA loans are generally assumable by a qualified buyer with lender approval, which can be a selling point later. Confirm terms at the time you sell.
- Homeowner’s insurance: the lender requires coverage on the property.
- Late payment: the fee and grace period are stated.
- Servicing: whether your loan may be transferred to another servicer.
- Refinance and liability after foreclosure: notes on future refinancing and state-law protections.
The confirm-receipt and signature lines at the bottom are optional acknowledgments that you received the form. Signing does not commit you to the loan.
Comparing Two or More Loan Estimates Side by Side
The CFPB encourages shopping several lenders, and national companies such as Rocket and Movement issue Loan Estimates just as brokers and local lenders do. To make the comparison fair, follow these steps:
- Request each estimate on the same day, so rates reflect the same market.
- Ask for the same loan amount, the same loan type (FHA), and the same rate lock period.
- Compare Section A, B, and C totals, the interest rate, the APR, and the five-year comparison.
- Enter the results in a simple grid, one row per item, with Estimate 1 and Estimate 2 on each line:
- Interest rate
- Points (Section A)
- Lender credits (Section J)
- Estimated cash to close
- Estimated monthly payment
The most common mistake is choosing the lowest rate without checking points or lender credits. A rate that looks a quarter point better may come with thousands in discount points. The second mistake is comparing estimates with different lock periods, since a longer lock typically costs more and distorts the rate.
Credit checks matter here too. Many lenders require a hard credit pull before issuing same-terms estimates. Duane Buziak uses NoTouch Credit Pull, a soft pull with no hard inquiry, to discuss your options up front. Because he works as a broker with access to 500+ wholesale lenders, his Dare to Compare challenge is simple: bring a competing Loan Estimate and he will run the numbers against it.
What Can Change Between the Loan Estimate and Closing
Fees can legitimately change when you or the loan circumstances change. Valid reasons include an expired rate lock, a different loan amount, an appraisal that comes in below the contract price, changes you request, or new information that was unavailable at application. When that happens, the lender must issue a revised Loan Estimate, and the new tolerances are measured against the revised form.
The Closing Disclosure must reach you at least three business days before closing. Lay it beside your latest Loan Estimate and check every section. Red flags include a new prepayment penalty, a changed loan product, a higher rate you did not request, or fees in zero-tolerance categories that rose without a revised estimate.
FHA transactions add a few pitfalls of their own:
- Appraisal repairs: FHA appraisers flag health and safety defects that must be fixed before closing, which can alter timing and costs.
- Case number transfers: if you switch lenders mid-process, the FHA case number must be transferred, which can affect the timeline.
- UFMIP recalculation: if the base loan amount changes, the 1.75% premium changes with it, as does the financed total.
Save every version of every document. Compare them line by line, and if anything looks off, ask for a written explanation before your rate lock deadline, while you still have leverage.
Questions Buyers Ask About the FHA Loan Estimate
How long does a lender have to send a Loan Estimate?
Three business days after receiving a complete application.
Is the Loan Estimate a loan approval?
No. It is a disclosure of expected terms and costs. Approval comes from underwriting.
Does requesting a Loan Estimate commit me to the loan?
No. You decide whether to proceed, and fees beyond a credit report cannot be charged until you say you intend to.
Where does the upfront FHA mortgage insurance premium appear?
It is 1.75% of the base loan amount and is usually financed, which raises the loan amount on Page 1. Its placement on Page 2 varies by format, so ask where it is itemized.
Is annual MIP a closing cost?
No. It is billed monthly and appears in the Projected Payments box.
Why is my FHA APR higher than my interest rate?
The APR includes mortgage insurance and certain loan costs, so it runs above the note rate on every FHA loan.
Which fees cannot go up after the Loan Estimate?
Origination charges, transfer taxes, and Section B services are zero tolerance. Others can rise by 10% in total or without limit.
What are the 2026 FHA loan limits?
Per HUD Mortgagee Letter 2025-23, the one-unit floor is $541,287 and the ceiling is $1,249,125. Your county’s limit falls between them, so check HUD’s lookup tool for your property.
Send Duane Buziak Your Loan Estimate Before You Sign Anything
The Loan Estimate is the best tool you have for catching surprises early, and a second pair of eyes makes it more useful. Send your estimate to Duane Buziak at FHA Mortgages by Duane Buziak for a plain-English review, or start an FHA purchase application and receive one built around your numbers. Buyers in Richmond, Henrico, Chesterfield, and Hanover are his daily focus, and he is licensed in VA, FL, TN, GA, and DC.
Ready to take the first step toward homeownership with an FHA loan tailored to your needs? Schedule your free consultation today and discover how Duane Buziak can guide you to your new home with competitive rates, 500+ wholesale lender access, NoTouch Credit Pull (soft pull, no hard inquiry), the Dare to Compare pricing challenge, and no-out-of-pocket closing options. Call 804-212-8663 or visit Coast2Coast Mortgage LLC, NMLS #1110647, at 4860 Cox Rd, Glen Allen, VA 23060.
