Updated May 2026 · Reviewed by Conan Watters, Licensed Arkansas Originator · NMLS #252910

Mortgage terminology can feel like a different language. Below are the 43 terms Arkansas borrowers most often need to understand — written for buyers, not bankers. If you have questions about any term as it applies to your specific situation, contact us at 501-225-5626.

ADFA Move-Up

Arkansas Development Finance Authority’s down-payment assistance program offering a $15,000 grant or $12,500 second mortgage that stacks with FHA, VA, USDA, or Conventional financing.

APR (Annual Percentage Rate)

The cost of borrowing expressed as a yearly rate that includes the interest rate plus fees and certain other charges, providing a more complete picture of loan cost than the note rate alone.

Appraisal

A licensed appraiser’s estimate of a property’s fair market value, required by lenders for purchase and most refinance transactions. Arkansas USDA and VA appraisals follow specific federal protocols.

ARM (Adjustable Rate Mortgage)

A mortgage with an interest rate that changes periodically based on a market index. Common terms in Arkansas include 5/1, 7/1, and 10/1 ARMs.

Closing Costs

Fees paid at the closing of a real estate transaction. In Arkansas, total closing costs typically run 2–5% of the purchase price for buyers, including lender, title, recording, and escrow fees.

Closing Disclosure (CD)

A 5-page form delivered to the borrower at least 3 business days before closing under TRID rules, showing final loan terms, projected payments, and itemized closing costs.

COE (Certificate of Eligibility)

The VA document confirming a veteran or active-duty service member’s entitlement to a VA loan. Can be obtained instantly online via eBenefits or pulled by your lender.

Conforming Loan Limit

The maximum loan amount Fannie Mae and Freddie Mac will purchase. For 2026, the conforming limit in most Arkansas counties is $806,500 for a 1-unit property.

Conventional 97

A Fannie Mae / Freddie Mac conventional mortgage allowing 3% down for qualified first-time and repeat buyers with 620+ FICO.

Conventional Loan

A mortgage not insured or guaranteed by the federal government. In Arkansas, the most common conventional loans are 30-year fixed and 15-year fixed up to the $806,500 conforming limit.

Debt-to-Income Ratio (DTI)

Total monthly debt payments divided by gross monthly income. Most Arkansas mortgages cap DTI at 43–50% depending on program.

Down Payment

The portion of the purchase price paid upfront. Arkansas options: 0% (USDA, VA), 3% (Conventional 97), 3.5% (FHA), 10%+ (Jumbo).

Escrow

An account held by the lender to pay property taxes and homeowner’s insurance from monthly mortgage payments. Required on most Arkansas FHA, VA, and USDA loans.

Equal Housing Lender

A federal designation under the Fair Housing Act prohibiting discrimination in mortgage lending. ARLoanSource and PRMI are Equal Housing Lenders.

Fair Housing Act

Federal law (Title VIII of the Civil Rights Act of 1968) prohibiting discrimination in the sale, rental, and financing of housing based on protected characteristics.

FHA Loan

Mortgage insured by the Federal Housing Administration with 3.5% down for 580+ FICO. 2026 Arkansas 1-unit limit: $524,225 in most counties.

FICO Score

A credit score ranging 300–850 used by mortgage lenders to assess credit risk. Minimum for FHA 3.5% down: 580. USDA: 640. VA: typically 580. Conventional: 620.

Funding Fee

A one-time fee charged on VA loans (1.4–3.6% of the loan amount, depending on entitlement use and down payment) to offset VA program costs. Waived for disabled veterans.

Gift Funds

Money from family or eligible donors used toward down payment or closing costs. Accepted on FHA, VA, USDA, and most Conventional loans with documentation.

Hazard Insurance

Property insurance covering damage from fire, wind, hail, and similar perils, required by all mortgage lenders. Arkansas premiums vary by tornado-corridor location.

HELOC (Home Equity Line of Credit)

A revolving credit line secured by your home’s equity, typically with a variable interest rate. Useful for renovations or debt consolidation without disturbing your first mortgage.

Hybrid ARM

An adjustable-rate mortgage with an initial fixed-rate period (commonly 5, 7, or 10 years) followed by annual rate adjustments.

IRRRL (Interest Rate Reduction Refinance Loan)

VA streamlined refinance allowing existing VA loan holders to lower their rate with minimal documentation. Often called a “VA streamline.”

Jumbo Loan

A mortgage exceeding the conforming loan limit ($806,500 for 2026 in most Arkansas counties). Common in Bentonville, Rogers, Fayetteville.

Loan Estimate (LE)

A 3-page TRID form lenders must provide within 3 business days of a complete application, showing estimated rate, payment, and closing costs.

LTV (Loan-to-Value)

The ratio of loan amount to property value (or purchase price, whichever is lower). 80% LTV is the threshold for removing conventional PMI.

MIP (Mortgage Insurance Premium)

Insurance premium charged on FHA loans: 1.75% upfront plus 0.55% annual (current rates). MIP cannot be cancelled on FHA loans originated after June 2013 in most cases.

NMLS (Nationwide Multistate Licensing System)

The federal system that licenses mortgage loan originators and companies. ARLoanSource Branch NMLS: #252910. PRMI Company NMLS: #3094. Verify at nmlsconsumeraccess.org.

Origination Fee

A lender fee for processing a new mortgage. Typically 0–1% of the loan amount. Required to be disclosed on the Loan Estimate.

PITI

Principal, Interest, Taxes, and Insurance — the four components of a typical monthly mortgage payment when taxes and insurance are escrowed.

PMI (Private Mortgage Insurance)

Insurance required on conventional loans with less than 20% down. Cancellable at 80% LTV by borrower request, automatic at 78% LTV by federal law.

Pre-Approval

A more formal commitment than pre-qualification, typically requiring a full credit pull and income verification. Stronger when making an offer in competitive Arkansas markets.

Pre-Qualification

An initial assessment of how much a buyer can borrow, based on self-reported income, assets, and credit. ARLoanSource provides same-business-day pre-qualification for most files.

Property Taxes

Annual tax on real estate, varying by Arkansas county (typically 0.5–0.8% of assessed value). Paid through escrow on most mortgages.

Reg Z (Regulation Z / Truth in Lending Act)

Federal regulation requiring mortgage lenders to disclose loan terms and APR. Prohibits public rate display without specific compliance triggers — why ARLoanSource does not display rates.

Refinance

Replacing an existing mortgage with a new one — typically to lower rate, change term, or pull out equity (cash-out).

Rural Development Loan (USDA)

Zero-down USDA-backed mortgage for buyers purchasing in USDA-eligible rural and suburban Arkansas areas. ~97% of Arkansas land qualifies.

TILA (Truth in Lending Act)

Federal consumer protection statute requiring clear disclosure of mortgage loan terms. The basis for Loan Estimate and Closing Disclosure forms.

TRID

TILA-RESPA Integrated Disclosure rule. Combines Loan Estimate (3-day delivery) and Closing Disclosure (3-day waiting period before closing) into a single set of consumer-protection requirements.

Underwriting

The lender’s formal review of a borrower’s creditworthiness and the property’s value, typically taking 5–15 business days after a complete application.

USDA Income Limit

Maximum household income for USDA Rural Development eligibility, varying by county. 2026 Arkansas cap is ~$112,450 for a 1-4 person household in most areas.

VA Entitlement

The dollar amount the VA guarantees on a VA loan. Most veterans have $36,000 basic entitlement plus a bonus entitlement that depends on the conforming loan limit.

VA Loan

Zero-down, no-PMI mortgage available to qualifying veterans, active-duty service members, and surviving spouses, guaranteed by the U.S. Department of Veterans Affairs.

Need help applying these to your situation? Get pre-qualified with ARLoanSource. NMLS #252910.