property
lenders title policy
A lender's title policy is title insurance that protects the mortgage lender's interest in a property against covered title defects, up to the outstanding loan balance. Most lenders require it as a condition of making a loan. The coverage decreases as the loan is paid down and ends when the loan is paid off. It does not protect the buyer's equity; the buyer needs a separate owner's title policy for that.
- Exam tip
- Lender's policy protects the lender up to the loan amount; owner's policy protects the buyer up to the purchase price. Who pays varies by local custom and contract.
- Example
- A buyer purchases a $400,000 home with a $320,000 loan. The lender's title policy covers $320,000, while an owner's policy would cover $400,000.
Related terms & state variants
Sources
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Last verified: 2026-10-23