Understanding Your PITI Payment
Most first-time home buyers focus solely on the mortgage principal and interest. However, your actual monthly bill will likely include "PITI": Principal, Interest, Taxes, and Insurance.
- Principal & Interest: The money paid back to the bank for the loan itself.
- Property Taxes: Paid to your local government, often bundled into your monthly mortgage bill by the lender (escrow).
- Homeowners Insurance: Protects your property from damage. This is mandatory for almost all mortgages.
How Down Payments Affect You
The size of your down payment directly impacts your monthly rate. A larger down payment reduces the Principal loan amount, which lowers your monthly obligation and total interest paid over the life of the loan.