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Budget and payments
Understand monthly payment, cash to close, down payment, taxes, insurance, and closing costs.
Terms in this section
Monthly payment
The recurring housing payment you want to stay within. For planning, this usually means principal, interest, property tax, insurance, and any mortgage insurance.
Cash to close
The money needed at closing, usually including the rest of your down payment, closing costs, prepaid items, and adjustments. Your lender and escrow/title company give the final wiring or cashier check instructions before closing.
Down payment
The part of the purchase price paid upfront instead of borrowed. It can be entered as a dollar amount or a percentage of the home price.
Down payment at closing
After earnest money, the remaining down payment is usually paid as part of cash to close before or at closing. Escrow or the title company gives instructions, commonly for a wire transfer or cashier check. Always verify wiring instructions by a trusted phone number before sending funds.
Interest rate
The annual rate charged on the mortgage balance. It drives principal and interest, but it is not the same as APR or the full monthly payment.
Property tax
A local tax based on property value and local tax rates. It is often paid through escrow as part of the monthly mortgage payment.
Homeowners insurance
Insurance for the property and certain losses. Lenders usually require it before closing, and quotes can affect the monthly payment estimate.
Closing costs
Fees and prepaid costs paid to complete the purchase and loan. They can include lender fees, title fees, recording fees, taxes, and prepaid insurance or interest.
Mortgage payment escrow
An optional holding account your lender may use after closing to collect money for property tax and homeowners insurance. If you do not escrow, you pay those bills yourself. The escrow part of your payment can go up when property tax or insurance costs increase.
This is a general reference, not mortgage, legal, tax, or insurance advice. Exact requirements vary by lender, loan program, contract, state, and property.