When buying a home, a down payment is the initial amount of money you pay upfront. Typically, it’s 20% of the home’s price, but some loans allow as little as 3.5% down. A larger down payment reduces the total amount you need to borrow, which means your monthly payments will be lower. If you want a more expensive home or want to lower your monthly payments, consider saving up for a bigger down payment.

The loan term is the length of time you have to repay your mortgage. Common terms are 30 years or 15 years, but there are other options. The term you choose affects your monthly payments and interest rate. A longer term like 30 years usually means lower monthly payments but more interest over time, while a shorter term like 15 years has higher payments but less total interest. Consider what works best for your budget and long-term financial goals.

There are different types of mortgage loans, mainly fixed-rate and adjustable-rate. A fixed-rate loan has a constant interest rate throughout its term, making your payments predictable and stable. An adjustable-rate mortgage (ARM), however, starts with a lower rate for a set time and then adjusts yearly. For example, a 5/1 ARM has a fixed rate for five years, after which it can change annually. ARMs often start with lower rates, which can be good if you plan to sell or refinance before the rate adjusts.

The interest rate is the percentage charged by the lender for borrowing money, and it can vary based on factors like your credit score and down payment. This rate affects how much you pay over the life of the loan. The property tax rate is a local tax based on your home’s value, paid to support community services like schools and roads. Both rates are included in your monthly mortgage payment. Mortgage calculators often pre-fill these rates with current averages, but you can adjust them in advanced options to reflect your actual rates.

Home insurance, also known as homeowners insurance, is typically required by lenders to protect against damages or losses to your home. It covers things like fires, storms, and other potential hazards. The cost of home insurance can vary, and it’s included in your mortgage payment calculation. You can adjust the estimated amount in most mortgage calculators to see how it affects your monthly payments and overall costs.

Homeowners Association (HOA) fees are payments made by residents of certain communities, like condos or planned neighborhoods, to maintain and improve shared spaces. These fees can vary widely depending on the community and what amenities or services are provided. HOA fees are usually paid monthly or annually and are in addition to your mortgage, so be sure to consider them when budgeting for a new home.