Mortgage Payment 101

When calculating a mortgage payment, here are the four basic costs:

  • Principal
  • Interest
  • Property Taxes
  • Insurance

Online mortgage calculators tend to give you the principal & interest payment but don’t forget about property taxes and insurance! Property taxes rate are county specific. LA County charges 1.25% (of the purchase price) every year, for example. Insurance costs around $100 per month on average.

Three additional costs may apply to you depending on the type of property you are purchasing and the type of loan you are qualifying for.

  1. Mortgage insurance:

Mortgage insurance is required the vast majority of the time when making a down payment less than 20%. Note: FHA loans require mortgage insurance on all loans regardless of the down payment amount.

  1. Home Owner Association Fees:

HOA fees apply to all condos, townhouses and even single family residences located when a PUD (planned unit development).

  1. Mello Roos and CFD fees.

These fees apply to many brand new home development communities. One pays either Mello Roos fees or CFD fees. Never both.

The added costs of mortgage insurance, HOA, Mello Roos and CFD fees can greatly increase your monthly mortgage payment. Make sure you know all the costs associated with any given property to give you the most accurate monthly payment.