What makes up your payment
Most monthly mortgage payments include four parts, often called PITI: principal (paying down the loan), interest (the lender's charge), property taxes, and homeowners insurance. Mortgage insurance and HOA dues may be added.
The four things that drive approval
- Credit: your score and history affect both approval and pricing.
- Income: lenders verify stable income to support the payment.
- Assets: funds for the down payment, closing costs, and sometimes reserves.
- Property: the appraisal and property type must meet the program's rules.
Glossary
- APR
- Annual percentage rate. The cost of the loan including interest and certain fees, expressed as a yearly rate.
- Amortization
- Paying off a loan through scheduled payments of principal and interest over the term.
- Appraisal
- An independent estimate of a property's market value, ordered for the lender.
- Closing costs
- Fees for the lender, title, appraisal, recording, and prepaid items such as taxes and insurance.
- Closing Disclosure
- The five-page form showing your final loan terms and costs, delivered at least three business days before closing.
- Conforming loan
- A loan within the limits and guidelines set for purchase by Fannie Mae and Freddie Mac.
- Debt-to-income (DTI)
- Your monthly debt payments, including the new housing payment, divided by gross monthly income.
- Discount points
- An upfront fee paid to reduce the interest rate. One point equals 1% of the loan amount.
- Escrow
- An account the servicer uses to pay your property taxes and insurance from your monthly payment.
- Loan Estimate
- The three-page form showing estimated rate, payment, and costs, delivered within three business days of applying.
- Loan-to-value (LTV)
- The loan amount divided by the property's value or price, whichever is lower.
- PITI
- Principal, interest, taxes, and insurance: the full monthly housing payment.
- PMI
- Private mortgage insurance, required on most conventional loans with less than 20% equity.
- Pre-approval
- A lender-reviewed conditional commitment based on verified credit, income, and assets.
- Rate lock
- A commitment to hold an interest rate for a set period while the loan is processed.
- Underwriting
- The lender's review of your application, documents, and property to make a final credit decision.
Ready to see your options?
Apply online in about 15 minutes, or call to talk it through first.