Pinnacle Funding Network
Lender Term Glossary
How to Use This Glossary
Every term on this page is one that shows up on an actual PFN term sheet, LOI, or quote. We wrote each definition in plain English, then added a short example so the number becomes real. If you're reviewing a quote from any lender (us or anyone else) and a term doesn't make sense, find it here first. If it's still unclear, call us and we'll walk through your specific deal.
A working broker's reference. Organized by category. Examples pulled from real PFN term sheets.
Jump to a Category
- Core Lending Terms
- DSCR-Specific Terms
- Fix and Flip / Rehab Terms
- Ground-Up Construction Terms
- Bridge and Hard Money Terms
- Closing, Title, and Fees
- Property Type Terms
Core Lending Terms
LTV (Loan-to-Value)
The loan amount expressed as a percentage of the property's appraised value or purchase price (whichever is less). A $300,000 loan on a $400,000 property is 75 percent LTV.
Example from a real PFN cash-out quote: $613 Upper Darby Rd was approved at 80 percent LTV on an $850,000 value, producing a $680,000 loan.
LTC (Loan-to-Cost)
The loan amount as a percentage of total project cost (purchase price plus rehab budget). Used on fix and flip and ground-up construction loans.
Example from a real PFN rehab quote: 10 Lakewood Trail had a $112,000 purchase plus $100,000 rehab = $212,000 total cost. At 85 percent LTC, the loan is $180,200 of that cost.
LTARV (Loan-to-After-Repair-Value)
The total loan amount as a percentage of the property's projected after-repair value (ARV). Used to cap total lender exposure on fix and flip loans. Typical max is 65 to 75 percent LTARV.
Example from a real PFN rehab quote: 10 Lakewood Trail had an ARV of $335,000 and a $212,000 total loan, yielding 63.2 percent LTARV, well inside the 75 percent cap.
LTAIV (Loan-to-As-Is-Value)
The loan amount relative to the property's current as-is value before renovation. Used on bridge loans and construction loans where the lender wants a ceiling on the initial advance.
Example from a real PFN construction LOI: Churchill Ground-Up had 28 percent LTAIV on the initial land/lot advance.
ARV (After Repair Value)
The appraised value of a property after all planned renovations are complete. Determined by an appraiser using comps. ARV is the most important number on a fix and flip deal; it drives LTARV, the exit strategy, and the profit projection.
As-Is Value
The current market value of a property in its present condition, before any renovation. Used as the baseline for bridge loans, hard money purchases, and rehab deals.
PITIA
The full monthly housing payment: Principal, Interest, Taxes, Insurance, and HOA/condo dues. PITIA is the denominator in the DSCR formula.
Example: A property with $1,600 monthly rent and $1,200 PITIA has a DSCR of 1.33.
Interest-Only Payment
A monthly payment covering only accrued interest, with no principal reduction. Standard on fix and flip and bridge loans because the borrower expects to pay off the full principal at exit (sale or refinance). Interest-only is typically charged on disbursed funds only, not on the undisbursed rehab holdback.
Per Diem Interest
Daily interest charged on the outstanding loan balance, typically applied to construction loans where the disbursed balance changes over time. Calculated as (annual rate x outstanding principal) / 360.
Origination Fee (Points)
An upfront fee charged by the lender to originate the loan, expressed as a percentage (points) of the loan amount. One point equals 1 percent of the loan.
Example from a real PFN DSCR quote: The 613 Upper Darby Rd cash-out refi was priced at 2.00 points on an $680,000 loan, producing a $13,600 origination fee.
Prepayment Penalty
A fee charged for paying off the loan before a set period. Common structures include 5-4-3-2-1 (5 percent in year one, down to 1 percent in year five) or 3-2-1 step-downs. Some DSCR programs waive prepay entirely.
Example from a real PFN quote: 613 Upper Darby Rd DSCR loan carries a 5-4-3-2-1 prepay structure. 10 Lakewood Trail rehab loan has no prepayment penalty.
Reserves
Liquid funds the borrower must hold in bank accounts after closing, typically measured in months of PITIA. Most DSCR lenders require 3 to 6 months of PITIA in reserves. See our full reserve requirements guide.
Full Recourse Guaranty
A loan structure in which the borrower (or a personal guarantor) is personally liable for the debt beyond the collateral property. If the property sells at a loss, the lender can pursue the guarantor's other assets. Most investment property loans are full recourse.
Non-Recourse Loan
A loan in which the lender's only remedy on default is the collateral property. Less common in DSCR and fix and flip; typically carries higher rates and lower LTVs when available.
Entity Borrower
A borrower structured as an LLC, corporation, partnership, or trust, rather than as an individual. Most DSCR and fix and flip lenders require entity borrowers. The entity takes title and signs the note; the individual owners sign a personal guaranty.
DSCR-Specific Terms
DSCR (Debt Service Coverage Ratio)
A ratio comparing a property's monthly rental income to its monthly PITIA. Formula: Monthly Rent / Monthly PITIA. A DSCR of 1.00 means the property breaks even. 1.25 means it covers the payment with a 25 percent cushion.
Example from a real PFN DSCR quote: 613 Upper Darby Rd had $5,200 monthly rent and $3,763 monthly PITIA, producing a 1.382 DSCR at 80 percent LTV.
Cash-Out Refinance
A refinance in which the new loan is larger than the existing debt, and the borrower receives the difference in cash at closing. DSCR cash-out refis typically cap at 75 percent LTV.
Rate-and-Term Refinance
A refinance that pays off an existing loan without pulling additional cash. Used to lower rate, shorten term, or replace a maturing bridge loan. Typically allows higher LTV than cash-out (often up to 80 percent on DSCR programs).
Title Seasoning
The length of time a property must be owned before the borrower can refinance or sell. DSCR cash-out refinances often require 3 to 6 months of title seasoning.
Fix and Flip / Rehab Terms
Rehab Holdback
The portion of a fix and flip loan set aside to fund renovation work, disbursed in stages as milestones are completed. The holdback is not funded at closing; the borrower pays for work in progress, then gets reimbursed per the draw schedule.
Example from a real PFN rehab quote: 10 Lakewood Trail had a $212,000 total loan: $112,000 purchase funds at close and a $100,000 rehab holdback disbursed through draws.
Draw Schedule
The plan for disbursing rehab holdback funds as construction milestones are reached. Typical schedules include 3 to 6 draws tied to completed scope of work. Each draw requires an inspection before funds release.
Draw Inspection Fee
The fee paid to a third-party inspector to verify completed work before the lender releases the next draw. PFN's standard is $300 per draw inspection.
Pro Rata Rehab (Interest on Disbursed Funds)
A method of calculating rehab interest where interest accrues only on drawn and disbursed funds, not on the undrawn balance. Saves the borrower interest on funds they haven't used yet. Contrast with interest on the full committed loan, which is more expensive.
Example from a real PFN construction LOI: Churchill Ground-Up specified pro rata rehab with per diem interest on disbursed funds only.
Ground-Up Construction Terms
Ground-Up Construction Loan
A loan funding the construction of a new building from bare land or lot. Typically disbursed through a land-acquisition advance plus staged construction draws. Underwrites to LTAIV on the lot and LTC on total project cost, with LTARV as the ceiling.
BPO (Broker Price Opinion)
A value estimate prepared by a licensed real estate broker, faster and cheaper than a full appraisal. Used on some bridge, construction, and smaller-balance scenarios. Not all lenders accept BPOs in place of appraisals.
Desk Review
A lender's internal review of an appraisal or BPO, verifying comparable sales and adjustments are reasonable. No site visit. Used as a second layer of diligence on larger or higher-LTV loans.
Environmental Data Review
A review of environmental risk data: flood zone, known contamination, proximity to hazardous sites, zoning history. Required on many construction, commercial, and larger-balance loans. Sometimes ordered as a Phase I Environmental Site Assessment on commercial deals.
Bridge and Hard Money Terms
Bridge Loan
A short-term loan (typically 6 to 24 months) used to purchase or stabilize a property before a longer-term refinance or sale. Rates are higher than DSCR; the trade is speed and flexibility. See our guide on bridge loans for stuck flips.
Hard Money
Asset-based financing from private or specialty lenders, priced on the collateral rather than the borrower's income. Common for fix and flip and bridge. See hard money vs DSCR for a direct comparison.
Maturing Hard Money Loan
A hard money loan approaching its balloon payment due date. Investors commonly refinance maturing hard money into a DSCR loan before maturity. See our guide on refinancing maturing hard money.
Closing, Title, and Fees
Title Insurance
An insurance policy protecting the lender (lender's policy) and/or the buyer (owner's policy) against title defects that arise after closing. Required on every real estate loan. Paid one time at closing.
Admin Fee / Underwriting Fee
A flat lender fee for processing and underwriting the loan file. Separate from origination points. Typical range is $1,500 to $3,000 at closing.
Example from a real PFN quote: 613 Upper Darby Rd DSCR loan carried a $2,900 admin fee at closing.
Doc Prep Fee
A flat fee for preparing the loan documents. Usually bundled with admin or closing costs. Typical range is $300 to $750.
Appraisal Fee
The cost of the property appraisal, paid by the borrower upfront or at closing. SFR appraisals typically run $500 to $850. Multi-unit and commercial appraisals run higher.
Property Type Terms
SFR (Single-Family Residential)
A property designed as a single dwelling unit. The most common collateral class for DSCR loans. Includes detached homes, townhomes, and some condos.
2-4 Unit (Small Multifamily)
A residential property with two, three, or four rental units. Still residential for lending purposes, not commercial. Usually financed at similar terms to SFR.
5+ Unit Multifamily
A property with five or more rental units. Classified as commercial real estate. Financed through commercial programs with different underwriting; DSCR still applies but under commercial terms.
STR (Short-Term Rental)
A rental leased for stays under 30 days, typically via Airbnb or VRBO. STR DSCR programs qualify loans based on projected short-term rental revenue, typically using AirDNA or 12 months of booking history.
BTR (Build to Rent)
A property (or subdivision) built specifically for rental, not for sale to owner-occupants. See our build-to-rent guide for the financing structure.
Still Have Questions?
If a term in your quote isn't here (or the definition still doesn't click against your specific deal), call us. We'll walk through your exact scenario and explain the number in real dollars. That's faster than any glossary.
James Loffredo, Principal
Pinnacle Funding Network
214-846-8602
info@pinnaclefundingnetwork.com
pinnaclefundingnetwork.com
Pinnacle Funding Network is a mortgage broker. PFN does not make loans or credit decisions. Loans are originated through PFN's lending partners. Rates, terms, and programs are subject to change. All loan applications are subject to credit review, property appraisal, and underwriting approval. Examples in this glossary come from real quotes but are illustrative; your exact terms will depend on your borrower profile and the specific deal.