Learn Dutch: Zie je dat huis? Dat is heel mooi. - Do you see that house? It is very beautiful.

When referring back to a specific het-word like het huis, Dutch speakers often use the demonstrative pronoun dat instead of het. You could say Het is heel mooi, but Dat is heel mooi sounds very natural and carries a slight emphasis, like saying 'That one is very beautiful.'

Why do we say dat huis and not die huis?

You use dat because huis is a het-word (het huis). If you were pointing at a de-word, like de auto (the car), you would use die auto for 'that car.'

Why doesn't the adjective mooi get an extra -e at the end here?

In Dutch, adjectives only get an added -e when they are placed directly before the noun they describe, such as in het mooie huis (the beautiful house). Here, mooi comes after the verb is, so it stays in its basic dictionary form.

Could I use erg instead of heel in this sentence?

Yes, absolutely. Heel mooi and erg mooi mean exactly the same thing. Dutch speakers use both words to mean 'very.'