Glossary
FICO score
The most widely used credit-scoring model among lenders, built by Fair Isaac Corporation — often used interchangeably with "credit score," though VantageScore is a common alternative.
FICO and VantageScore both score 300–850 using similar inputs, but their formulas weight factors slightly differently and can produce different numbers from the same credit file — that is why the number you see on a free app may not match what a lender pulls. FICO remains the model most lenders actually use for underwriting decisions, so it is the more reliable number to track. There are also multiple FICO versions (FICO 8, FICO 9, mortgage-specific versions), and lenders don't always use the newest one.
Related terms
- DTI Debt-to-income ratio: monthly debt payments divided by gross monthly income. Most lenders draw the line at 36–43%.
- Reverse mortgage A loan for homeowners 62+ that pays you from your home equity instead of the other way around — repaid when you sell, move out, or pass away.
- Underwriting The process a lender uses to verify your income, assets, debts, and credit before approving a loan — the "yes or no" behind every offer.
- Origination fee An upfront charge (0–8% of the loan) deducted before funds reach you. A $10,000 loan with a 5% fee delivers $9,500 — but you repay all $10,000.
- Short sale Selling a home for less than what is owed on the mortgage, with the lender's approval — an alternative to foreclosure.
- PMI Private mortgage insurance — a monthly premium that protects the lender, not you, when your down payment is under 20%.