A complete mortgage payment typically includes PITI: Principal (the loan amount being repaid), Interest (the cost of borrowing), Taxes (property taxes, often collected monthly and held in escrow), and Insurance (homeowners insurance and PMI if applicable). Some payments may also include HOA fees. Our calculator breaks down each component.

Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home's value. PMI protects the lender if you default. You can avoid PMI by: 1) Making a 20% or larger down payment; 2) Using a piggyback loan (80-10-10); 3) Choosing a lender-paid PMI option (higher rate); 4) Requesting PMI removal once you reach 20% equity.

A 15-year mortgage has higher monthly payments but saves significantly on total interest and builds equity faster. A 30-year mortgage has lower monthly payments, providing more flexibility, but costs more in total interest. Consider: your income stability, retirement timeline, other financial goals, and whether the payment difference could be invested elsewhere.

Fixed-rate mortgages maintain the same interest rate throughout the loan term, providing predictable payments. Adjustable-rate mortgages (ARMs) start with a lower rate that adjusts periodically based on market conditions. ARMs may be beneficial if you plan to sell before the rate adjusts, but carry risk if rates increase significantly.

Credit scores significantly impact mortgage rates. Scores above 760 typically qualify for the best rates. A score between 700-759 may add 0.25-0.5% to your rate. Scores below 620 may disqualify you from conventional loans. Improving your score before applying can save tens of thousands over the life of the loan.