A Loan Estimate is a standardized, three-page document that lenders are legally required by the federal government to provide to you within three business days of receiving your mortgage application. This document replaced older, more confusing paperwork formats to give buyers absolute transparency regarding their potential loan terms.
The Loan Estimate clearly outlines your estimated interest rate, projected monthly payment, and the total cash you will need to bring to the closing table. It also specifically alerts you to risky loan features, such as prepayment penalties or balloon payments. Because all lenders must use this exact same standard form, it is the perfect tool for comparing different mortgage offers side-by-side to ensure you are getting the most competitive deal.
The CFPB provides an excellent interactive Loan Estimate explainer that walks you through the document page-by-page so you know exactly how to double-check your lender's numbers.