Step 2: How Much Can I Afford?

What Does a House Payment Include?

A house payment usually consists of four different parts– Principal, Interest, Taxes, and Insurance (collectively referred to as PITI). The principal is the amount borrowed or still owed. The interest is the amount that the lender charges for lending the money to you. Finally, the taxes and insurance include property taxes, homeowners insurance, and sometimes, mortgage insurance.

Visit the Texas Mortgage Calculator to determine what you can afford.

Other Costs Associated with Buying a Home?

Down payment. The down payment is the borrower’s first investment in the house. The minimum amount of the down payment is determined by the lender and is usually 3-5% of the purchase price; however, making a larger down payment will reduce the amount you borrow and your monthly payments.

Closing costs. Closing costs include money paid to the lender to review the loan, money paid to the city, county, or state for transfer taxes or recording fees, and fees paid to professionals or businesses that provide services to make the sale go smoothly, such as lawyers, and escrow agents.  Closing costs also include fees the borrower may be asked to pay in advance, such as a credit report fee or an appraisal fee. Closing costs can range from 2-7% of the purchase price. Usually your earnest money, which serves as a deposit with your purchase offer, is applied at closing to your total down payment and closing costs.

Need Help With These Costs?

Down payment assistance programs can help make buying a home more affordable. Learn more about TSAHC’s down payment assistance programs by visiting

See Step 3

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