Reference

Glossary

Plain-language definitions for every metric KnowVest calculates. 26 terms across home-buyer and rental-investor analysis. Hover or tap any term inside the analyzer to see the same definition inline.

Shared

Terms used in both Home Buyer and Investor modes.

Down payment: The cash you put toward the purchase price up front, before borrowing the rest. Down payment % depends on loan type and property use.
Property tax: Annual tax owed to the local government, typically billed monthly inside the mortgage payment. Varies by state and county.
Insurance: Annual homeowners or landlord insurance premium, billed monthly inside the mortgage payment. Required by lenders while a mortgage is outstanding.
Appreciation: Annual change in property value, usually shown as a percentage. Past appreciation does not predict future appreciation; the over-time projection on this report shows three scenarios so you can see the range.
Equity: The portion of the property you own outright: the current market value minus the remaining loan balance. Grows from both paying down the loan and any appreciation.

Home Buyer

Terms specific to buying a primary residence.

PITI — Principal, Interest, Taxes, Insurance: The full monthly housing payment: loan payment (principal + interest) plus property tax and insurance escrowed monthly. Also includes mortgage insurance when the down payment is under 20%.
PI — Principal & Interest: The portion of the monthly housing payment that goes to the loan itself: paying down principal and the interest charged on it.
PMI — Private Mortgage Insurance: A monthly fee lenders add when the down payment is under 20% on a conventional loan, protecting the lender if you default. Falls off once the loan balance hits ~78% of the original price.
Front-end DTI — Housing-to-Income Ratio: PITI divided by gross monthly income. Lenders typically want this below 28-31% depending on loan type.
Back-end DTI — Total Debt-to-Income Ratio: PITI plus all other monthly debt payments (cars, student loans, credit cards) divided by gross monthly income. Lenders typically want this below 43-50% depending on loan type.
Max affordable price: The highest purchase price your income and debts can support at the standard back-end DTI limit for your loan type, given current rates and the taxes and insurance you provided. Estimate only — your lender will run their own underwriting.
Cash to close: The total cash you need available on closing day: down payment plus closing costs plus a reserve cushion lenders want to see in your bank account.
Closing costs: Fees due at closing: lender origination, title insurance, escrow, recording, appraisal, and similar. Typically 2-4% of the purchase price.
Reserves: Cash a lender wants you to have left after closing, sized in months of full PITI. Varies by loan type and property use; this report assumes 3 months.
Readiness score: A 0-100 estimate of how prepared your finances are for this specific purchase. Combines DTI strain, cash on hand, and credit; not a lender decision and not a credit score.

Investor

Terms specific to rental property analysis.

DSCR — Debt Service Coverage Ratio: Net operating income divided by the mortgage payment. Lenders generally want DSCR at or above 1.25× to approve a debt-service-coverage loan.
Cap rate — Capitalization Rate: Annual net operating income divided by the purchase price, shown as a percentage. Used to compare properties at different price points within the same market.
Cash-on-cash return: Annual cash flow divided by the total cash invested (down payment plus closing costs). Measures the return on the cash you actually put in, ignoring loan paydown and appreciation.
NOI — Net Operating Income: Gross rental income minus vacancy and operating expenses, before mortgage payments. The number a cap rate is calculated from.
GRM — Gross Rent Multiplier: Purchase price divided by gross annual rent. Lower is generally better; useful for quick screening before running full numbers.
Break-even occupancy: The minimum percentage of units that must be rented to cover all costs including mortgage. Below this percentage, you are paying out of pocket each month.
Monthly cash flow: What you keep each month after all rental income, vacancy reserve, operating expenses, and mortgage payment. Positive means the property pays you; negative means you feed it.
Vacancy reserve: The percentage of gross rent set aside for months a unit sits empty between tenants. Standard assumption is 5-10% depending on market.
CapEx reserve — Capital Expenditure Reserve: A monthly set-aside for big-ticket replacements: roof, HVAC, water heater, appliances. Different from routine maintenance and not optional over a long enough horizon.
Rent comparable: Nearby rental listings that signal what your unit could rent for. KnowVest pulls live comparables from RentCast within ~1.5 miles of the address you analyze.
Comp average: The mean rent of the most-similar nearby comparables. KnowVest picks the most specific cohort that has at least 3 comps — exact bed/bath when possible, otherwise within ±1 bedroom, otherwise all nearby.

Definitions are estimates and educational only — not financial advice. For investor lending guidelines (DSCR ratios, reserve requirements), consult a licensed mortgage professional. For buyer qualification (FHA/VA/conventional DTI limits), consult a licensed lender. More about KnowVest.