Step 2: How Much Can I Afford?

What Does a House Payment Include?

A house payment usually includes four things– 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.

Other Costs Associated with Buying a Home?

Down payment. The minimum amount of the down payment is determined by the lender and loan type 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 can range from 2-7% of the purchase price, and can include the following:

  • fees paid to the lender to review the loan
  • fees paid to the city, county, or state for transfer taxes or recording fees
  • fees paid to professionals or businesses that provide services to make the sale go smoothly, such as lawyers, and escrow agents 
  • fees the borrower may be asked to pay in advance, such as a credit report fee or an appraisal fee. 

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  

TSAHC’s down payment assistance calculator can also help you determine your monthly payment with TSAHC’s loan and down payment assistance options.

See Step 3

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