Like most industries, the mortgage industry has a number of acronyms and abbreviations which mean nothing to people who are not in the industry, but are used on a regular basis by those of us in the industry. It can be confusing and difficult to understand what a mortgage specialist is talking about for home buyers who do not understand the lingo. In an effort to break down this wall of confusion, at least slightly, here is a list of some acronyms and what they mean.

FHA – Federal Housing Administration. This is a government agency which oversees the US housing market and guarantees mortgages with less stringent guidelines than traditional lending.

VA – Veterans Administration. A government agency which guarantees loans for veterans and active duty military personnel. These loans have extremely lax guidelines.

Fannie Mae – Federal National Mortgage Association. A Government Sponsored Enterprise created by congress to help borrowers gain access to mortgages.

Freddie Mac – Federal Home Loan Mortgage Corporation. A Government Sponsored Enterprise created by congress to help borrowers gain access to mortgages.

LTV – Loan to value. The percent of the home’s value which you are borrowing in the mortgage (generally home value – down payment in a purchase transaction).

CLTV – Combined Loan to Value. The loan to value of all loans (including any 1st and 2nd mortgages).

DTI – Debt to Income. Ratio of home buyer’s monthly income compared to monthly obligations. The obligations include the full PITI, monthly payments on credit cards, car loans, personal loans, school loans, or other outstanding loans, and any child support or alimony.

PI – Principal and interest. Monthly payment due on principal and interest every month.

PITI – Principal, interest, taxes, and insurance. The total cost of the mortgage every month, including taxes and insurance if they are escrowed.

I hope this list has helped. If there are any other acronyms you have run across which you would like explained, please leave a comment or contact me and I will help you out or add them to the list.