# This is How to Calculate Your Monthly Mortgage Payment

Figuring out what your mortgage and property expenses will be is very important to know whether or not you can afford a home. There are a few secondary expenses outside of a conventional mortgage that many people are not aware of. In this post, I'll explain the costs associated with a mortgage and some additional expenses that will factor in to the average homeowner's monthly expenses.

The magic acronym here is PITI. These are the four major components that affect a homeowner's monthly expenses. Fortunately, Chad Pluid recently wrote a short article entitled, "How to Calculate Your Monthly House Payment" for Redfin that defines these costs. They have also included a short video to explain the costs and what they're for.

• P is for Principal

The principal is the amount of money that you borrow. It's pretty straight forward. If you buy a house for \$200,000 and get a mortgage for the full amount, your principal amount is \$200,000.00. If you put 10% down and borrow the rest on the same amount, your down payment will be \$20,000.00, which is deducted from your principal and makes your principal amount \$180,000.00. Essentially your principal is just whatever amount you need to borrow from your lender.

• I is for Interest

• T is for Taxes

• I is for Insurance