Real Estate Terms Every New Buyer and Seller Should Know

Key Takeaways

• This article is a beginner-friendly glossary of core U.S. real estate and mortgage terms that buyers and sellers will encounter in 2024–2026 contracts, lender documents, and closing paperwork.
• You will learn money-related terms first, including down payment, earnest money, closing costs, interest rate, annual percentage rate, loan-to-value, and debt-to-income, so you can avoid costly surprises before signing anything.
• The guide clearly compares a fixed-rate mortgage versus an adjustable rate mortgage (ARM), and breaks down conventional versus FHA loans backed by the Federal Housing Administration, with a side-by-side comparison table.
• Dedicated sections translate contract and escrow language into plain English, plus there are separate mini-guides written specifically for home buyers and for home sellers.
• FastExpert can connect you, at no cost, with vetted local real estate agents and loan professionals who use these terms every day and can explain exactly how they apply to your specific deal.

Introduction: Why Real Estate Terms Matter in 2024–2026

U.S. home prices, mortgage rates, and lending rules have shifted dramatically since 2020. With 30-year fixed mortgage rates averaging roughly 6.5%–7% through much of 2025 and only recently dipping toward the low-6% range in mid-2026, every percentage point and every contract clause carries real financial weight. Real estate requires understanding various key industry terms and jargon before you sign a single document.

This article is written from the perspective of experienced real estate professionals at FastExpert, speaking directly to first-time buyers and sellers who may feel overwhelmed by the vocabulary that shows up in offers, loan applications, and closing disclosures. Whether you are buying your first home or selling a residential property you have owned for years, knowing these terms helps you compare mortgages, read contracts, and communicate confidently with agents, lenders, and closing attorneys.

Rather than listing definitions A–Z, we have organized sections by topic-money, loans, contracts, escrow, buyer-specific terms, and seller-specific terms-so the most urgent questions get answered first. All examples assume U.S. residential real estate (not commercial), and keep in mind that local laws and customs vary by state. The Fair Housing Act prohibits discrimination in housing transactions, and that protection applies in every market you will encounter.

Money Terms You’ll See in Every Transaction

Start here if you are brand new to real estate. The terms below show up in virtually every real estate transaction, from your first mortgage application to your final closing statement.

Down Payment

The down payment is the upfront portion of the home’s purchase price paid by the buyer in cash at closing. On a conventional mortgage, typical down payments range from 3% to 20% or more, depending on the loan program and the borrower’s credit profile. For example, on a $400,000 home:

A larger down payment lowers your loan to value ratio (more on that below), which can reduce your interest rate and eliminate the need for private mortgage insurance.

Earnest Money

Earnest money is a deposit made to demonstrate serious intent to purchase a property. It is sometimes called a good-faith deposit. Nationally, earnest money typically runs 1%–3% of the purchase price, though in competitive markets buyers may offer 5% or more to strengthen their position. On a $400,000 home, that means $4,000–$12,000 deposited into an escrow account shortly after the seller accepts your offer. If the sale closes, earnest money is usually credited toward your down payment or closing costs. If you back out for a reason not covered by your contract contingencies, you risk losing it. More on that in the contracts section below.

Closing Costs

Closing costs are all the non-price fees paid at settlement. They include lender fees (such as the origination fee and underwriting charges), the appraisal, title insurance, transfer taxes, recording fees, prepaid property taxes, homeowner’s insurance, and more. Closing costs range from 2% to 5% of the home’s price. On a $350,000 purchase, that is roughly $7,000–$17,500.

Seller concessions can sometimes cover part or all of a buyer’s closing costs-an important negotiating tool we will discuss later. For a deeper look at all the fees first-time buyers actually pay, see First-Time Home Buyer Costs: What You’ll Really Pay to Get the Keys.

Interest Rate

The interest rate is the base yearly cost the lender charges on the outstanding principal balance of your mortgage loan. In 2024, many 30-year loans carried rates near 6.75%; by mid-2026, the monthly average interest rate on a 30-year fixed has drifted closer to 6.27%. Even a small difference-say 25 basis points (a basis point equals 1/100th of a percentage point)-can shift your monthly mortgage payment by dozens of dollars and your total interest payments by thousands over the life of the loan.

Annual Percentage Rate (APR)

APR (Annual Percentage Rate) expresses the total yearly cost of a loan including fees and interest. It folds the interest rate together with many lender charges-origination fee, discount points, and certain prepaid items-into a single number that makes side-by-side comparison easier. For example, a lender might advertise an interest rate of 6.5%, but once you factor in $4,000 in points and loan fees, the APR comes out to about 6.9%. Always compare APR when evaluating similar mortgage offers from different lenders, but remember that APR assumes you keep the loan to full term. If you plan to sell or refinance early, the upfront costs weigh more heavily.

Debt-to-Income Ratio (DTI)

Your debt to income ratio tells lenders how much of your gross monthly income goes toward monthly debt payments. There are two versions:

• Front-end DTI covers housing costs only (principal and interest payments, property taxes, homeowner’s insurance-often referred to as PITI, which stands for principal, interest, taxes, and insurance, the core components of a monthly mortgage payment). Many lenders look for front-end DTI under about 28%–36%.
• Back-end DTI adds all other debt obligations (car loans, student loans, credit card minimums) to your housing costs. Most conventional lenders target a maximum back-end DTI around 43%, though some programs allow higher ratios with compensating factors.

A general guideline: a home is affordable if mortgage payments are under 30% of income, giving you breathing room for maintenance, utilities, and unexpected expenses.

Loan-to-Value Ratio (LTV)

LTV (Loan-to-Value) ratio assesses risk by comparing the mortgage amount to the home’s appraised value (or purchase price, whichever is lower). If you buy a $400,000 home with a $320,000 loan, your LTV is 80%. Lenders prefer LTV at or below 80% because it signals the borrower has significant equity-the owner’s financial interest in a property, calculated as market value minus mortgage balance. When LTV exceeds 80%, most conventional lenders require mortgage insurance to protect themselves in case the borrower defaults on the loan.

Mortgage Types and Key Loan Language

Choosing the right mortgage type-fixed versus adjustable, conventional versus government-backed-often has a bigger impact on your long-term cost than small differences in purchase price. Below are the most common options you will encounter.

Fixed Rate Mortgage

A fixed rate mortgage locks your interest rate and principal-and-interest payment for the entire loan term. A 30-year fixed at 6.25%, for example, means your rate and base monthly payment will never change, regardless of what happens in the broader economy. The main advantage is stability; the trade-off is that fixed rates typically start higher than the introductory rate on an ARM. For help deciding between a shorter or longer fixed term, see 15-Year Vs. 30-Year Mortgage: Choosing the Right Option for You.

Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage starts with a fixed introductory rate for a set period-commonly 5, 7, or 10 years-then adjusts periodically. An adjustable-rate mortgage (ARM) adjusts rates every six months after an initial period in many current products (such as a 5/6 ARM). After the fixed window closes, your rate is recalculated based on an index (like the Secured Overnight Financing Rate, or SOFR) plus a margin set by the lender, subject to caps on how much the rate can change per adjustment and over the life of the loan. The maximum interest rate your ARM can reach is defined by these lifetime caps. Lenders must give borrowers advance notice before each adjustment takes effect.

ARMs can make sense if you plan to sell or refinance before the introductory period ends. In 2025–2026, 5-year ARMs have been quoted around 5.13% while 30-year fixed rates sat near 6.6%–7%-a meaningful gap that saves hundreds per month during the fixed window.

Conventional Loan

A conventional loan is not guaranteed by a government agency. It is originated by private lenders, mortgage brokers, savings and loan institutions, or banks, and typically requires stronger credit and at least 3%–5% down. When lenders make conventional loans, they often sell them on the secondary mortgage market-a system where primary mortgage lenders sell mortgages to entities like the Federal National Mortgage Association (Fannie Mae), which purchases conventional mortgage loans, bundles them, and sells conventional residential mortgages to investors. This process keeps capital flowing so lenders can issue new loans.

In 2023, the conforming loan limit for most of the U.S. was $726,000. A jumbo loan exceeds the conforming loan limit of $726,000 and carries different underwriting requirements and often higher rates.

FHA Loans and the Federal Housing Administration

The Federal Housing Administration (FHA) is a government agency under the U.S. Department of Housing and Urban Development that has been insuring residential mortgage loans since 1934. An FHA loan is a mortgage insured by the FHA, designed to help borrowers who may not qualify for conventional financing. FHA loans allow down payments as low as 3.5% of the total loan amount, and the credit underwriting process is more forgiving than conventional standards.

The cost trade-off comes from FHA mortgage insurance. FHA mortgage insurance requires both an upfront mortgage insurance premium (typically 1.75% of the loan amount, which can be rolled into the loan balance) and an annual mortgage insurance premium paid monthly. Unlike private mortgage insurance on a conventional mortgage-which can be canceled once your LTV drops below 80%-FHA MIP often remains for the life of the loan if your initial down payment was less than 10%. This makes the total monthly payment on an FHA loan potentially higher over time, even though the entry barrier is lower. For a closer look at how FHA financing works, see FHA Loans: Important Factors You Need to Know.

Mortgage borrowers working with HUD approved mortgage bankers or lenders can access FHA programs, and the mortgage originator guaranteeing compliance with FHA guidelines submits the loan for government insurance.

Other Government-Backed and Specialty Loans

• VA loan: Available to veterans, active-duty service members, and eligible surviving spouses. A VA loan is essentially a no downpayment loan guaranteed by the Department of Veterans Affairs. Instead of mortgage insurance, borrowers pay a VA mortgage funding fee, which can be financed into the loan.
• USDA loans: Designed for eligible rural areas, also offering low or zero down payment options.
• Construction loan: A short-term loan used to finance building a new home; it typically converts to a permanent mortgage once construction is complete.
• Bridge loan: Short-term financing that helps a buyer purchase a new home before selling their current one, bridging the gap between transactions.
• Lease purchase mortgage loan: A hybrid arrangement where a tenant leases a property with the option (or obligation) to purchase it, sometimes using specialized financing.
• Reverse annuity mortgage: Commonly known as a reverse mortgage, this product is designed for homeowners age 62 and older. A reverse mortgage provides monthly payments based on home equity-essentially, the lender makes periodic payments to the borrower rather than the other way around.
• G graduated payment mortgage: A loan with payments that start low and increase at a scheduled rate, designed for borrowers who expect rising monthly income over time.
• Mortgage life insurance: A policy that pays off the remaining loan balance if the borrower dies; it is separate from mortgage insurance required by the lender.

The mortgage note is the legal document you sign promising to repay the mortgage loan under stated terms. It records the interest rate, repayment schedule, and consequences if the borrower defaults.

Fixed vs. ARM and FHA vs. Conventional: Quick Comparison

Escrow, Title, and How Your Payments Are Handled

The words “escrow” and “title” appear from the moment your offer is accepted through every monthly payment you make as a homeowner. Here is what each actually means.

Escrow Account (Transaction)

Escrow accounts are held by a neutral third party until transaction conditions are met. During a home purchase, a title or escrow company (or a closing attorney, depending on the state) holds the earnest money and coordinates the flow of documents, inspections, and funds. Nothing changes hands until all contract conditions-financing approval, clear title, satisfactory inspection-are satisfied.

Mortgage Escrow Account

After closing, many lenders set up a mortgage escrow account that collects a portion of your property taxes and homeowner’s insurance with each monthly payment. The lender then pays those bills on your behalf when they come due. This is why your mortgage payments often include more than just principal and interest-your total monthly payment covers PITI. The lender requires this to make sure you pay real estate taxes and insurance on time, protecting both you and their investment in the property.

Title and Title Search

Title refers to legal ownership of real property. A title search is a review of public records-deeds, liens, court judgments, easements-to confirm the seller holds clear, undisputed property ownership that can be transferred. Issues like unpaid tax liens, mechanic’s liens, or boundary disputes can cloud title and delay or block closing. For a more detailed look at how these concepts differ, read Differences Between House Deed and Title. A deed establishes ownership of real property and is the document recorded in county land records to finalize the transfer.

Title Insurance

Title insurance is a one-time fee paid at closing. An owner’s policy protects the buyer’s legal ownership rights if a title defect surfaces later (for example, a forged deed or unknown heir). A lender’s policy protects the lender’s mortgage lien. Without title insurance, you assume the full risk of hidden defects.

Closing (Settlement)

Closing is the appointment where all documents are signed, loan funds are released, and the deed is recorded with the county, making the buyer the official new owner. In some states, a closing attorney manages this process; in others, a title or escrow company handles it. Local customs also dictate which side-buyer or seller-pays specific closing costs such as transfer taxes, title insurance premiums, and recording fees.

Contract & Negotiation Terms You’ll Hear From Your Agent

Once you start making or responding to offers, a new layer of vocabulary appears. This section translates the terms your agent, the other party’s agent, and the attorneys will use most often. For even more phrases decoded, see Decoding Real Estate Phrases: What Your Agent is Saying and What it Means.

Offer and Purchase Agreement

An offer is the buyer’s written proposal to purchase a home at a stated purchase price with specific terms, contingencies, and a proposed closing date. Once the seller accepts, the document becomes a purchase agreement (or sales contract)-a legally binding contract governing the entire real estate transaction.

Contingencies

Contingencies are conditions in a purchase agreement that must be met for a sale to proceed. The most common are:

• Financing contingency: The buyer must secure a mortgage loan under specified terms. If the loan is denied, the buyer can cancel and reclaim earnest money.
• Appraisal contingency: A home appraisal determines a property’s fair market value. If the appraised value comes in below the contract price, the buyer can renegotiate, increase the down payment to cover the gap, or cancel.
• Inspection contingency: The buyer has a window (often 7–10 days) to have the home professionally inspected and negotiate repairs or credits.

Due diligence is a negotiated timeframe for buyers to inspect a property and review its condition, overlapping closely with the inspection contingency period. If contingencies are not satisfied within their deadlines, the buyer typically has the right to walk out with earnest money intact. For data on how frequently deals collapse at this stage, see How Often Do Contingent Offers Fall Through?.

A backup offer secures a buyer’s position if the first offer fails-useful in competitive markets where multiple buyers are interested.

Earnest Money Within Contracts

When earnest money can be refunded versus forfeited depends entirely on the contract language. If a buyer cancels because the inspection revealed serious defects within the contingency period, the deposit is typically returned. If the buyer simply changes their mind after contingencies have been removed, the seller usually keeps the deposit as liquidated damages. Contracts spell out the deposit deadline (often 1–3 business days after acceptance) and acceptable payment methods (wire transfer, certified check). Learn more at Expert Advice: Is Earnest Money Refundable?

Seller Concessions

Seller concessions are costs the seller agrees to pay on the buyer’s behalf at closing. Common examples include covering a portion of the buyer’s closing costs or funding discount points to reduce the buyer’s rate. Loan programs cap concessions-many conventional loans limit them to roughly 3%–6% of the sale price, depending on LTV.

Comparative Market Analysis (CMA) and Comps

CMA (Comparative Market Analysis) estimates a home’s value based on similar properties recently sold in the same area-known as “comps.” Agents prepare CMAs to help sellers set a competitive listing price and to help buyers gauge whether an offer is fair. FastExpert agents use CMAs tailored to local market data when advising clients.

As-Is

An “as-is” sale means the seller will not make repairs. Buyers can usually still inspect the property and cancel under the inspection contingency if conditions are unacceptable. The label shifts repair risk to the buyer, so the inspection becomes even more critical. An existing assumable loan on the property may also play into negotiations-if the seller has an older mortgage at a lower rate, the buyer might be able to assume it, though a due on sale clause in many conventional mortgages typically prevents this without lender approval.

Key Real Estate Terms for Buyers

This section is written directly to you, the buyer. Whether you are purchasing your first home or re-entering the market after years away, these are the terms and concepts that will matter most during your search.

Pre-Qualification vs. Pre-Approval

Pre-qualification is an informal estimate based on self-reported income, debts, and assets-helpful for ballpark budgeting but not a commitment from the lender. Pre-approval is a step further: the lender verifies your credit risk score, income documents, and assets, then issues a conditional commitment letter stating how much you can borrow. Offers that include a pre-approval letter are viewed far more favorably by sellers, especially in competitive markets. Before you start touring homes, talk to a lender or a realtor first so you know your budget.

DTI for Buyers

Lenders in 2024–2026 typically enforce maximum back-end DTIs of roughly 43%–50%, depending on the loan type and compensating factors. Here is a simple example:

• Gross monthly income: $6,000
• Estimated housing payment (PITI): $1,700
• Car payment: $400
• Student loan: $200
• Credit cards: $100
• Total monthly debt payments: $2,400
• Back-end DTI: $2,400 ÷ $6,000 = 40%

A 40% DTI would qualify under most conventional and FHA programs. FHA purchase borrowers in fiscal year 2025 had an average DTI of about 44.91%, reflecting FHA’s more lenient standards. Still, aiming for a lower ratio gives you a financial cushion. Use FastExpert’s Mortgage Affordability Calculator to test different scenarios with your own numbers.

Loan Estimate and Closing Disclosure

Under federal law (the Truth in Lending Act and Regulation Z), your lender must issue a standardized Loan Estimate within three business days of receiving your mortgage application. This document breaks down the interest rate, APR, estimated monthly payment, and all loan fees. At least three business days before closing, you receive a Closing Disclosure with final numbers. Compare the two carefully-any major unexplained increases are a red flag you should raise with your lender immediately.

ARM vs. Fixed From a Buyer’s Perspective

If you expect to stay in your home for 7+ years, a fixed rate mortgage provides certainty-your principal and interest payments will never change. If you plan to move or refinance within 5 years, an ARM’s lower introductory rate could save you hundreds per month. Either way, review options with a trusted loan officer or mortgage broker who can model both scenarios against your timeline.

Mortgage Points and Buydowns

Discount points are upfront fees that buy down your interest rate. One point costs 1% of the loan amount and typically reduces the rate by about 0.25%. On a $380,000 loan, one point costs $3,800 and might lower your rate from 6.75% to roughly 6.50%, saving about $65/month on your monthly mortgage payment. Break-even is roughly 58 months-if you keep the loan longer than that, points pay off.

A 2-1 buydown reduces interest rates temporarily by 2% and 1%. In the first year, your rate is 2 percentage points below the note rate; in the second year, it is 1 point below; from the third year on, you pay the full rate. A 2-1 buydown reduces mortgage interest rates by 2% and 1%, making early mortgage payments more manageable. The cost of the buydown is often paid by the seller as a concession or by the buyer at closing.

Buyer’s Agent and FastExpert

A buyer’s agent searches for homes, negotiates offers, guides you through inspections and the closing process, and coordinates with your lender. A buyer’s agency fee compensates agents for managing home purchases-how that fee is structured may vary by market and brokerage. Through FastExpert’s free matching service, you can compare multiple vetted local agents by track record, client reviews, responsiveness, and neighborhood expertise instead of picking one at random.

Home Inspection and Final Walkthrough

A home inspection evaluates a property’s condition before purchase. A licensed inspector examines the roof, foundation, plumbing, electrical, HVAC, and more, typically within 7–10 days of going under contract. The results help you decide whether to proceed, negotiate repairs, request a credit, or exercise your inspection contingency and walk away. For compelling reasons to never skip this step, see 5 Reasons You Should Get A Home Inspection.

The final walkthrough happens within 24 hours of closing. You verify that agreed-upon repairs have been completed, the property is in the expected condition, and no new damage has occurred. It is your last chance to catch problems before you sign.

Key Real Estate Terms for Sellers

Sellers face their own vocabulary that directly affects pricing strategy, timeline, and how much money actually ends up in their pocket. Here are the terms you will hear most often.

Listing Agreement and Listing Price

A listing agreement is the contract between you and your listing agent (a licensed real estate broker or their associate). It spells out the commission structure, the listing duration, your responsibilities for disclosures, and the agreed listing price. Setting the right listing price depends on current market conditions, comparable sales from a CMA, local inventory levels, and the condition of your home.

Seller’s Market vs. Buyer’s Market

In a seller’s market, buyers outnumber available homes-demand outstrips supply, multiple offers are common, and home prices typically rise in a seller’s market. A buyer’s market occurs when homes outnumber buyers, giving purchasers more leverage to negotiate price reductions, request repairs, and ask for concessions. Recognizing which type of market you are in shapes every decision from pricing to contingency flexibility.

Net Sheet / Seller Net Proceeds

A seller’s net sheet estimates what you will take home after paying off any existing mortgage, closing costs, real estate agent commissions (often 5%–6% of the sale price), prorated property taxes, transfer taxes, title and escrow fees, and any concessions you agreed to. Always ask your agent to run a net sheet before accepting an offer so you understand your true bottom line.

Many sellers also explore the mortgage interest deduction implications of paying off an existing mortgage early, though this is a tax question best directed to an accountant.

Seller Concessions and Repairs

From a seller’s perspective, concessions are dollars out of your proceeds. Agreeing to pay $8,000 of a buyer’s closing costs on a $400,000 sale effectively nets you $392,000 minus other costs. However, a well-placed concession-or funding a 2-1 buydown for the buyer-can attract more offers and sometimes support a higher contract price, resulting in a faster sale.

When the buyer requests repairs found during inspection, you have options: complete the repair, offer a credit, reduce the price, or refuse (especially in an as-is sale). For more detail on what happens if repairs are not completed, see What Happens If A Seller Does Not Make Repairs Before Closing?.

Days on Market (DOM) and Price Reductions

Days on market (DOM) measures how long a property is active from listing date to going under contract. If your DOM significantly exceeds the neighborhood average, it signals to buyers that something may be wrong-overpricing, poor condition, or weak marketing. Strategies to course-correct include staging improvements, enhanced photography, stronger online marketing, or incremental price reductions (typically 1%–2% at a time). If you own an income-producing property or investment property, DOM trends in that submarket may differ from single-family residential norms, so make sure your agent understands both segments.

Seller Disclosure

Most states require sellers to complete a written disclosure form summarizing known defects and issues with the property-roof age, plumbing problems, mold history, boundary questions, and more. You are not required to find every possible defect, but you must not conceal known issues. Failure to disclose can lead to post-closing lawsuits. Disclosure rules vary by state, so ask your agent what is required in your area.

Listing Agent and FastExpert

Your listing agent handles pricing strategy, marketing (professional photos, staging advice, open houses), negotiation of offers and contingencies, and contract management through closing. The right agent knows whether private property sale norms in your neighborhood favor certain concession structures or marketing approaches. To compare local listing agents by sales volume, client reviews, and neighborhood expertise, check out How to Interview a Realtor When Selling a Home and use FastExpert’s free matching tool.

How FastExpert Helps You Navigate These Real Estate Terms

FastExpert is a free agent-matching platform serving buyers and sellers throughout the United States. You answer a few questions about your location, price range, and goals, and FastExpert matches you with multiple experienced local real estate agents-and related professionals like loan officers-so you can compare before committing.

FastExpert does not charge consumers for this service. Matched agents are evaluated on transaction history, client reviews, responsiveness, and local market knowledge. That means the agents you connect with understand not just the definitions in this article, but how they play out in your specific city, neighborhood, and price point. Local norms for earnest money, seller concessions, commission structures, and closing cost splits vary county by county-a vetted local agent makes those details clear.

If you still feel unsure about any of the terms covered here, speaking with one or more FastExpert agents is the fastest way to get answers tailored to your deal. Use FastExpert’s agent search and mortgage calculator tools to start applying these terms to your own buying or selling plans today.

FAQ: Real Estate Terms New Buyers and Sellers Still Ask About

Is APR or interest rate more important when comparing mortgage offers?

You should look at both. The interest rate shows the raw cost of borrowing on the principal, while the annual percentage rate includes interest plus many lender fees-origination fee, discount points, and certain prepaid items-expressed as a yearly figure. APR is better for side-by-side comparisons when you are evaluating the same loan type and term (for example, two 30-year fixed-rate mortgage offers).

However, a very low advertised rate paired with high fees can still produce a higher APR than a slightly higher rate with minimal fees. If you plan to keep the loan to full term, APR gives you a clearer picture. If you expect to refinance or sell within a few years, weigh the upfront costs more heavily against the monthly savings.

How much earnest money should I put down, and can I lose it?

Earnest money is typically 1%–3% of the purchase price, but local custom and market competition can push it higher or lower. In very hot markets, buyers sometimes offer 5% or more to stand out. You can lose your earnest money if you walk away for reasons not covered by your contract contingencies or after you have removed those protections. A good agent structures deadlines and contingencies carefully so you have clearly defined exit points. Always understand the contract terms around earnest money before you sign.

What is a “good” debt-to-income ratio to qualify for a mortgage?

Many conventional lenders target a maximum back-end DTI around 43%, though automated underwriting systems may approve ratios up to 50% with strong compensating factors such as a high credit risk score, substantial cash reserves, or a lower LTV. FHA programs are more lenient and frequently approve borrowers with DTIs in the mid-to-high 40s.

That said, qualifying at the maximum does not mean it is comfortable. Aiming for a total DTI under 36%–40% leaves financial breathing room for maintenance, utilities, and unexpected costs that come with property ownership.

Do I need an escrow account for taxes and insurance, or can I pay them myself?

Many lenders require an escrow account if your loan-to-value ratio is above a certain threshold-often above 80%-or for certain loan types like FHA loans. This protects the lender by ensuring property taxes and insurance are paid on time. Some borrowers with larger down payments and conventional loans may be allowed to waive escrow and pay taxes and insurance directly, but this option can come with a slightly higher interest rate or a one-time fee depending on the lender. Ask your loan officer during the application process so there are no surprises.

When should a seller consider offering concessions or a 2-1 buydown to the buyer?

Seller concessions-including funding a temporary 2-1 buydown of the buyer’s interest rate-make the most sense when days on market are rising, inventory in your neighborhood is growing, or competing listings offer similar features at similar prices.

By covering a few thousand dollars in buyer closing costs or subsidizing a lower rate for the first two years, you can make your listing more attractive without simply cutting your asking price. Work with your listing agent to calculate whether the concession cost is offset by a potentially higher contract price or a faster sale. This is especially relevant in today’s market where mortgage rates remain elevated, and buyers are stretching to afford monthly payment levels.