IBA Compliance Connection

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What do we use to determine the “Loan Term” on a Loan Estimate and Closing Disclosure, the date of loan or the date the first payment is due?

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The “loan term” is the term of the debt obligation. The borrower typically incurs the debt obligation on the date the loan is made, regardless of when the first payment is due. Consequently, we believe that you should use the date the loan is made — not the date of the first payment — to determine the loan term for the Loan Estimate and Closing Disclosure.

For resources related to our guidance, please see:

  • Regulation Z, 12 CFR 1026.37(a)(8) Loan Estimate (“The term to maturity of the credit transaction, stated in years or months, or both, as applicable, labeled ‘Loan Term.’”)
  • Regulation Z, 12 CFR 1026.38(a)(5)(i) Closing Disclosure (“The information required to be disclosed under § 1026.37(a)(8), labeled ‘Loan Term.’”)