What will my total monthly mortgage payment include?
Understand the pieces that can make the real housing payment larger than principal and interest.
A total monthly mortgage payment commonly includes principal and interest, and it may also include amounts collected for property taxes, homeowners insurance and mortgage insurance.
HOA or condominium fees and some other property costs may be paid separately rather than through the lender.
The exact payment structure depends on the loan, property, escrow arrangement and local costs.
Principal and interest
Principal reduces the amount borrowed. Interest is the lender’s charge for the loan. Together they form the basic loan payment, but they may not represent the full housing cost.
Taxes, insurance and escrow
When an escrow account is used, part of each payment is set aside for certain property taxes and insurance bills. Those amounts can change when the underlying tax or premium changes.
Mortgage insurance
Mortgage insurance may apply depending on the loan program, down payment and other circumstances. Conventional mortgage insurance and FHA mortgage insurance do not follow identical rules.
Costs that may sit outside the payment
- HOA or condominium assessments
- Utilities
- Maintenance and repairs
- Separate insurance or tax items not escrowed
Understand the complete housing cost
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