Buying a home comes with a lot of terminology — and for first-time buyers, it can feel like learning a new language. Understanding key mortgage and real estate terms helps you make confident, informed decisions.

Here are 20 essential terms every buyer should know 👇

1️⃣ Amortization

The total length of time you take to fully pay off your mortgage. 

✔️ typically 25 years 

✔️ can be 30 years with 20%+ down 

✔️ affects payment size and interest over time 

2️⃣ Appraisal

An independent estimate of your property’s market value. 

✔️ lenders use it to confirm value 

✔️ protects buyers from overpaying 

✔️ required for many mortgage types 

3️⃣ Closing Costs

The extra costs you must pay on closing day. 

✔️ legal fees 

✔️ land transfer taxes 

✔️ title insurance 

These usually total 1.5%–4% of the purchase price. 

4️⃣ Co-Signer

A person who agrees to repay the mortgage if you can’t. 

✔️ helps with qualification 

✔️ adds stability to the application 

✔️ carries legal responsibility 

5️⃣ Down Payment

The amount you pay upfront toward the purchase price. 

✔️ minimum 5% 

✔️ 20%+ avoids mortgage insurance 

✔️ must be verified with a 90-day history 

6️⃣ Equity

The portion of the home you truly own. 

✔️ increases as mortgage is paid down 

✔️ can grow with rising home values 

✔️ unlockable through refinancing 

7️⃣ Fixed Rate Mortgage

A mortgage where your interest rate stays the same for the full term. 

✔️ predictable payments 

✔️ stable budgeting 

✔️ less sensitive to market changes 

8️⃣ GDS & TDS Ratios

GDS = housing costs vs income 

TDS = housing + debts vs income 

✔️ GDS usually max ~35–39% 

✔️ TDS usually max ~39–44% 

✔️ lenders use them to assess affordability 

9️⃣ High-Ratio vs Conventional Mortgage

High-ratio = less than 20% down → requires mortgage insurance. 

Conventional = 20%+ down → no insurance required. 

1️⃣0️⃣ Interest Rate

The cost of borrowing money. 

✔️ determines payment amount 

✔️ varies by lender and risk 

✔️ can be fixed or variable 

1️⃣1️⃣ Mortgage

A loan secured against the property you’re buying. 

✔️ legal agreement 

✔️ involves repayment terms 

✔️ includes rights and obligations 

1️⃣2️⃣ Mortgage Broker

A licensed professional who shops multiple lenders for you. 

✔️ compares rates 

✔️ finds best fit 

✔️ works for the client, not one bank 

1️⃣3️⃣ Mortgage Default Insurance

Required for buyers with under 20% down. 

✔️ protects the lender 

✔️ allows smaller down payments 

✔️ offered by CMHC, Sagen, Canada Guaranty 

1️⃣4️⃣ Open vs Closed Mortgages

Open = flexible, repay anytime, higher rate 

Closed = limits prepayments, penalties apply if broken 

1️⃣5️⃣ Pre-Approval

A lender reviews your financials and confirms your borrowing limit. 

✔️ sets a price range 

✔️ helps lock in rates 

✔️ not a final approval until property is reviewed 

1️⃣6️⃣ Refinance

Replacing your current mortgage with a new one. 

✔️ access equity 

✔️ lower payments 

✔️ change rates or terms 

1️⃣7️⃣ Mortgage Term

The length of time your rate and contract are locked in. 

✔️ typically 1–5 years 

✔️ most common is 5-year fixed 

✔️ renegotiated at the end 

1️⃣8️⃣ Title

Legal proof of ownership of a property. 

✔️ shows who owns the land 

✔️ required for mortgage registration 

1️⃣9️⃣ Title Insurance

Protects against issues with ownership or title defects. 

✔️ covers fraud 

✔️ covers errors 

✔️ protects lender and/or owner 

2️⃣0️⃣ Variable/Adjustable Rate Mortgage (ARM)

A mortgage where the rate can change based on market conditions. 

✔️ often starts lower 

✔️ may increase over time 

✔️ payments or amortization can shift 

💬 Final Thought

Understanding key mortgage terms helps you avoid surprises and make smarter decisions throughout the home-buying process. The more you know ahead of time, the smoother and less stressful the experience becomes.

If you want help decoding your mortgage options or reviewing terminology before you buy, message The Frontline Mortgage Group and we’ll walk you through everything step-by-step.