A Loan Estimate is a good-faith estimate, but good faith has a legal definition. Federal rules measure the estimate against what the borrower actually pays at closing and set limits on how much each kind of charge can rise. Those limits are called tolerances.
Knowing the three groups helps a borrower read the Closing Disclosure. An increase in one group is a violation the lender must fix. An increase in another is normal. The difference depends on who controls the fee and whether the borrower chose the provider.
The rules come from Regulation Z, 12 CFR 1026.19(e)(3). Source: 12 CFR 1026.19.
Some charges must match the Loan Estimate at closing, with no increase allowed. In general, this group includes:
The logic is control. The lender either sets these fees itself or picks the provider, so the lender is expected to know the cost when it issues the estimate. If one of these charges rises at closing without a valid reason, the lender pays the difference.
A second group can increase, but only in total, and only up to 10 percent above the sum shown on the Loan Estimate. This group generally includes:
The 10 percent limit applies to the group as a whole. One fee can rise and another can fall, and the test compares the total at closing to the total on the estimate. Individual lines can move as long as the combined total stays within the limit.
The logic here is shared responsibility. The lender gave the list, so the lender is expected to estimate those providers' costs reasonably well. The borrower picked from it, so some movement is allowed.
The third group has no fixed tolerance, as long as the original estimate was made in good faith with the best information available. This group generally includes:
The logic is that these amounts depend on facts outside the lender's control, often on the borrower's own choices.
When the lender lets a borrower shop for a service, it provides a written list of providers. In a Texas purchase, title services are often the main shoppable item, along with the survey in some files.
Choosing a title company that is not on the list moves its fees from the 10 percent group to the group that can change. That is a reason to look at the list before choosing. Shopping is still worth doing. In Texas, many title insurance premiums are promulgated by the Texas Department of Insurance, so the premium itself is regulated, while other title-related fees can vary by company.
In a resale contract, the title company is often named in the contract, chosen by the parties during negotiation. The lender's list and the contract's choice may differ. Asking early how the chosen title company fits the tolerance groups avoids confusion later.
A tolerance is measured against the estimate in effect. A valid revised Loan Estimate can reset the baseline for the charges it affects. Regulation Z allows revisions for specific reasons, including:
The revision has timing rules, and it resets only the charges tied to the event. A rate lock resets rate-dependent charges and leaves the appraisal fee alone. A revised estimate that raises an unrelated lender fee is not supported by the event.
If a charge exceeds its tolerance at closing, the lender cures the excess. Most often that is a credit on the Closing Disclosure, shown in a labeled spot that states the amount exceeds the legal limit. If the problem is found after closing, the lender must refund the excess within the time Regulation Z allows after consummation and provide a corrected disclosure.
A seller credit cannot cure a lender tolerance problem. A seller credit is a contract term between buyer and seller. The tolerance obligation belongs to the lender.
The initial escrow deposit often looks different at closing than on the estimate. Property tax figures get refined once the title company confirms the tax bill, the closing date sets how many months must be collected, and the insurance premium may be final only near closing. Those amounts are in the group that can change, so the difference is allowed.
Understanding the mechanism still helps. The escrow deposit funds the account the servicer uses to pay future tax and insurance bills, and its size depends on when those bills come due relative to the first payment. A change in that figure usually traces to a change in the tax estimate, the premium, or the closing date.
Fictional example: consider a Loan Estimate showing a lender fee. At the Closing Disclosure, that lender fee is higher, and nothing about the loan changed. That increase is a zero-tolerance violation. The cure is a lender credit.
In the same file, the homeowners insurance premium came in higher than the estimate because the buyer chose a lower deductible. That increase can stand. It sits in the group that can change, and it resulted from the buyer's own choice.
The truth sits between "nothing can change" and "everything is a guess." The three groups describe which fees are locked, which are capped as a group, and which follow the facts.
Borrowers sometimes read a higher cash to close as proof that a tolerance was broken. Cash to close moves for many reasons that sit outside the tolerance groups entirely: a larger down payment after a low appraisal, a different tax proration, a smaller seller credit after renegotiation, or a change in the earnest money credited. The tolerance test looks only at specific charges against the estimate in effect. The Calculating Cash to Close table on the disclosure shows which line moved, and that is the place to start the question.
Agents sometimes assume the lender can absorb any increase to keep a deal together. The lender's cure obligation covers charges that broke their tolerance. Other increases are part of the transaction and are handled through the contract, a revised structure, or the borrower's funds.
If a fee on your Closing Disclosure is higher than your Loan Estimate and you want to know whether it is allowed, send me both and I will check each line against its tolerance group. Book a call, or start an application.
Links checked Oct 21, 2026.
About the author: McKade Lively, NMLS 2704474, American Pacific Mortgage Corporation dba True North Home Loans, NMLS 1850.
Equal Housing Opportunity.
Last reviewed: Oct 2026