The four things that make up your mortgage payment

There’s more to your monthly mortgage payment than the amount you borrowed to purchase your home. When you’re calculating how much house you can afford, be sure to consider all of the components that typically make up your monthly home loan payment.

Start with the principal. The principal is the amount of money you borrowed to purchase your home and have to pay back.

Add interest. The interest is what the lender charges for lending you the money.

Don’t forget the taxes. Property taxes can be a significant amount of your monthly payment, depending on where you’re buying property. These taxes fund schools, city and county services and other local entities, and are based on the tax rate for each of those taxing authorities applied to the appraised value of your property.

Lastly, the insurance. Homeowners insurance payments are typically bundled into your mortgage payment. Most lenders require it. If you made a downpayment of less than 20%, private mortgage insurance (PMI) will be a part of your mortgage payment as well.