Plain-English glossary
Mortgage Basics Glossary
Use this glossary before comparing mortgage payments or rent-versus-buy numbers. It explains the inputs that usually move the monthly payment.
What this glossary is for
Mortgage estimates can look precise while still leaving out taxes, insurance, fees, maintenance and local rules. The glossary helps separate the loan payment from the fuller cost of owning.
Key terms
Principal
The amount borrowed, before interest. If the home price is 250,000 and the deposit is 50,000, the principal starts around 200,000 before fees.
Deposit / down payment
Money paid upfront to reduce the amount borrowed. A larger deposit usually lowers the loan amount and monthly payment.
Interest rate
The annual rate used to calculate interest on the loan balance. Small rate changes can move the monthly payment noticeably.
APR
A broader annual borrowing cost that can include interest and certain fees. It is useful for comparing loan offers, but it is not the same as the monthly interest rate used in a simple payment formula.
Loan term
How long the mortgage is scheduled to run. A longer term usually lowers monthly payments but can increase total interest paid.
Property tax and insurance
Extra ownership costs that may sit outside a simple principal-and-interest calculation.
Maintenance buffer
Money set aside for repairs and upkeep. It is not part of the mortgage formula, but it matters for affordability.
How to use the terms
Read the definition first, then open the calculator that uses the same term. Change one input at a time so you can see which number drives the result.
Main related calculator
The first tool below is the most directly related calculator for this glossary. The remaining links stay within the same topic so the page does not send visitors into unrelated tools.