Glossary Plain-English Definitions for Every Term in the Skill Library and PRD For Sydney Bocik (Chief of Staff) + BIX Tech Corp | v1.0 | March 2026 | CONFIDENTIAL
Section 1 — Mortgage Math Terms Core mathematical and financial concepts used throughout the Clarity Engine.
Term Definition PMT Monthly payment amount. Computed by the formula: pmt = loan × (r×(1+r)^n)/((1+r)^n-1), where r = annual_rate/12 and n = term in months. NEVER use the annual rate directly — always divide by 12 first.
Number of periods (months) needed to pay off a loan given a fixed payment, rate, and balance. Used in term-reduction scenarios. Amortization The process of paying down a loan balance through scheduled monthly payments. Each payment covers interest first; the remainder reduces principal. DTI Debt-to-Income ratio. Front-end DTI: housing payment / GMI. Back-end DTI: (housing payment + all monthly obligations) / GMI. Expressed as a decimal or percentage. GMI Gross Monthly Income. Pre-tax income used for DTI calculations. For salaried borrowers: annual salary / 12. For self-employed: 2-year average net income from tax returns, divided by 24. LTV Loan-to-Value ratio. Loan amount / MIN(purchase_price, appraised_value). 80% LTV = 20% down payment.
Principal + Interest + Taxes + Insurance + Assessments (HOA). The total monthly housing payment used in DTI and qualification calculations.
PITIA + Monthly Mortgage Insurance. Used for FHA where MIP is mandatory. P&I Principal and Interest. The base mortgage payment before taxes, insurance, or MI. Rate Annual interest rate, expressed as a decimal (e.g., 0.065 = 6.5%). Always divide by 12 for monthly calculations.
Debt Service Coverage Ratio. For investment properties: gross_rent_monthly / PITIA. ≥1.00 = property covers debt service. ≥1.25 = lender preferred. Uses GROSS rent — not net, not after vacancy. Recapture Break-even analysis for refinancing. Months to recover closing costs: closing_costs / monthly_savings. Cash-Out A refinance where the new loan is larger than the current balance. The borrower receives the difference in cash at closing. Prepaid Interest Interest owed from closing date to end of first month. Per-day calculation: (loan × annual_rate / 365) × days.
Section 2 — Loan Program Terms Program-specific terminology for Conventional, FHA, VA, and DSCR loans.
Term Definition Conventional A mortgage loan not backed by a government agency. Follows Fannie Mae/Freddie Mac guidelines. Requires PMI if LTV > 80%. FHA Federal Housing Administration loan. Government-insured. Lower credit score minimums and down payment requirements. Requires UFMIP + monthly MIP regardless of LTV. VA Veterans Affairs loan. Government-backed, available to eligible veterans, active duty, and surviving spouses. No down payment required. No PMI. Requires funding fee (financed or paid at closing).
Debt Service Coverage Ratio loan. Used for investment properties. Qualification is based on property income, not borrower income. No W-2 or pay stub required.
Loan-Level Price Adjustment. A fee grid applied to Conventional loans based on LTV and credit score combinations. Higher LTV + lower score = higher LLPA = higher effective rate.
Upfront Mortgage Insurance Premium. FHA only. = base_loan × 1.75%, financed into the loan at closing. P&I must be computed on the total loan including UFMIP. MIP Monthly Mortgage Insurance Premium. FHA only. If LTV > 90%: life of loan (360 months). If LTV ≤ 90%: 11 years. Rate: 0.55% annual on the base loan balance. PMI Private Mortgage Insurance. Conventional only. Required when LTV > 80%. Cancellable at 80% LTV (automatically at 78%). Monthly cost varies by LTV and credit score. COE Certificate of Eligibility. VA document that confirms the borrower's entitlement. Required before VA loan can close. Typically verified through VA eBenefits or lender portal. Entitlement A VA borrower's available guarantee amount. Basic entitlement: $36,000. Full entitlement eliminates loan limits in most counties. Reduced if borrower has an existing VA loan. Residual Income VA-specific metric. Monthly income remaining after all debts are paid. Required minimum varies by loan size, family size, and geographic region. A PASS/FAIL gate — not a ratio. Funding Fee VA only. A one-time fee paid to the VA, typically financed into the loan. Rate depends on down payment amount and whether it is first or subsequent use. 2.15% for first use with no down payment. AUS Automated Underwriting System. Fannie Mae uses DU (Desktop Underwriter); Freddie Mac uses LPA (Loan Product Advisor); FHA uses TOTAL Scorecard. AUS approval allows DTI exceptions and higher risk tolerance. Manual UW Manual Underwriting. A human underwriter reviews the file instead of (or in addition to) AUS. More conservative — typically 43% DTI limit vs 50%+ for AUS-approved files. TOTAL Scorecard FHA's AUS. Approves borrowers with DTI up to 57% if score ≥ 580. Decline triggers manual underwriting path. DU / Desktop Underwriter Fannie Mae's AUS. Approve/Eligible = up to 50% DTI. Refer/Eligible = manual review. Refer with Caution = significant risk flags. GFE Good Faith Estimate. A standardized disclosure of estimated closing costs. Replaced by the Loan Estimate (LE) under TRID rules. APR Annual Percentage Rate. The true cost of the loan, including fees and interest, expressed as a yearly rate. Always higher than the note rate. Points Prepaid interest to buy down the note rate. 1 point = 1% of the loan amount. Each point typically reduces the rate by 0.25%. CTC Cash to Close. Total funds the borrower must bring to closing: down payment + closing costs - lender credits - seller concessions. Overlay A lender-specific requirement stricter than the program guideline minimum. Example: FHA guideline allows 580 score, but a lender may overlay a 620 minimum.
Section 3 — Clarity Engine System Terms Internal terms specific to the Clarity Engine skill architecture and data model.
Term Definition BorrowerProfile The canonical normalized borrower data object produced by the Borrower_Profile Skill. Contains gmi_qualifying, qualifying_credit_score, verified_assets, property details. Single source of truth for all downstream skills. ProgramQueue The output of the Program_Router Skill. An ordered list of programs that passed all 5 gates and are eligible for full qualification, along with preliminary calculations (LTV, prelim payment). QualResult The output object from any program qualification skill (VA, Conventional, FHA, DSCR). Contains: qualification_status, pitia, back_end_dti, cash_to_close, all computed values, and a LineageTrace. LineageTrace A decision log emitted by each qualification skill. Records every gate, every computed value, and every pass/fail outcome. Consumed by the Audit_Trace Skill to build the full AuditTrace. qualification_status The enumerated outcome of program qualification. Values: QUALIFIED | QUALIFIED_TOTAL_ACCEPT | QUALIFIED_MANUAL_UW | CONDITIONAL | INELIGIBLE_DTI | INELIGIBLE_LTV | INELIGIBLE_CREDIT | INELIGIBLE_WAITING_PERIOD | DSCR_ELIGIBLE_STRONG | DSCR_ELIGIBLE_PASS | DSCR_CONDITIONAL. OptimizationResult Output of the Optimization Skill. Contains composite_score for each evaluated program, dimension_scores for 6 dimensions, always_approved_state, and sensitivity analysis. composite_score A 0–100 score for each program. Weighted sum of 6 dimensions: payment (0.35), MI (0.20), CTC (0.20), approval certainty (0.20), plus quality bonus. Uses ABSOLUTE benchmarks. always_approved_state A flag from the Optimization Skill. CURRENTLY_ACHIEVABLE = at least one program is qualified with confidence ≥ 0.70. NOT_CURRENTLY_ACHIEVABLE = no program meets that threshold. ScenarioSet Output of the Scenario_Generation Skill. Up to 5 scenarios, each describing a concrete action that resolves a binding constraint. Includes action_type, effort_impact_score, timeline, cost. effort_impact_score A 0–100 score for each scenario. effort×0.40 + impact×0.60. Higher score = easier to do AND more impactful. Scenarios are ranked by this score; top 3–5 are surfaced. RankedProgramList Output of the Ranking Skill. Programs sorted by composite_score, with tiebreakers applied where needed, and confidence scores computed for each. OverlayAdjustedResult Output of the Overlay Skill. Confidence scores after applying lender overlays, waiting period checks, and state-specific rules. AuditTrace Output of the Audit_Trace Skill. The complete decision record for a Clarity Engine run. Contains trace IDs for every decision node, deviation map, ECOA export, HMDA fields, and ML training record. trace_id Unique identifier for a decision node in the AuditTrace. Format: [Layer].[SkillCode].[Sequence].[Outcome]. Example: L3.VA.09.P = VA Skill, Stage 9, Pass. AlwaysApprovedStatement Output of the Always_Approved Skill. The capstone Purlend output. Contains: tier (1–4), status_line, best_path_detail, action_required, confidence_close. Ends with 'This path is clear.' AlwaysApproved Tier 4 tiers: TIER_1 = approved now. TIER_2 = approved with one action. TIER_3 = approved with multiple actions. TIER_4 = approved with time (waiting period). quality_bonus An additive bonus to composite score based on program type. VA: +15, Conventional: +10, FHA: +0, DSCR: +5. Reflects program structural advantages (no PMI, no down payment, etc.). proximity_score The composite score computed for an INELIGIBLE program as if it were qualified. Not used for ranking. Used in scenarios to show 'how close' the borrower is to qualifying. data_quality_score A 0–1 score attached to every ML training record. Starts at 1.00. Deducted for estimated values (−0.05), null required fields (−0.10), unverified assets (−0.15).
Section 4 — Regulatory Terms Regulatory, compliance, and industry standard terms referenced in the skill library.
Term Definition
Equal Credit Opportunity Act. Prohibits discrimination in credit decisions based on race, color, religion, national origin, sex, marital status, age, or income from public assistance. Requires adverse action notice with specific reasons if credit is denied. Adverse Action Notice Required under ECOA when a credit application is denied or offered less favorable terms. Must include specific reasons. The Clarity Engine's ECOA Export in the Audit_Trace produces these reasons.
Home Mortgage Disclosure Act. Requires lenders to collect and report data on mortgage applications and originations. The Clarity Engine's HMDA fields feed this reporting. Race/ethnicity/gender fields are collected by the lender only — not by the Clarity Engine (fair lending firewall).
Real Estate Settlement Procedures Act. Governs closing cost disclosures and prohibits kickbacks between settlement service providers. ATR Ability to Repay. Dodd-Frank requirement that lenders verify a borrower can repay the loan. Qualified Mortgage (QM) loans have a safe harbor for ATR compliance.
TILA-RESPA Integrated Disclosure. Rules that standardize the Loan Estimate (LE) and Closing Disclosure (CD) forms. Replaced the Good Faith Estimate.
Fair Credit Reporting Act. Governs use of credit reports in credit decisions. Requires credit score disclosure when a credit score is used in an adverse action decision. QM Qualified Mortgage. A loan that meets ATR safe harbor requirements. Generally requires DTI ≤ 43% (with exceptions for AUS-approved loans), no risky features (interest-only, negative amortization, balloon payments), and points/fees ≤ 3%. Fair Lending Laws (ECOA, FHA Act) that prohibit discriminatory lending practices. Clarity Engine never uses race, ethnicity, national origin, sex, religion, marital status, age, or income source in any qualification or scoring calculation. Anti-Steering Dodd-Frank rule requiring lenders to present borrowers with loan options in their best interest, not the lender's. Clarity Engine always surfaces the program that is best for the borrower first.
Mortgage Industry Standards Maintenance Organization. The standards body for mortgage data exchange. Clarity Engine field names align with MISMO 3.6 where applicable. Fannie Mae Selling Guide Fannie Mae's canonical guidelines for Conventional loan eligibility. December 2025 edition is the current reference. Max DTI: 36% manual / 45% standard DU / 50% DU with conditions. VA Lenders Handbook VA's canonical guidelines for VA loan eligibility. Chapter 4 governs residual income tables. Chapter 6 governs funding fees. Official source for all VA rules.
FHA's Single Family Housing Policy Handbook. The canonical source for all FHA guidelines. Section II covers loan qualifications.
CONFIDENTIAL — PreFi, Inc. / Purpose Technology, Inc. d/b/a Purlend | Clarity Engine Glossary v1.0