How is my monthly mortgage payment calculated?

Your monthly mortgage payment is calculated using the loan amount (home price minus down payment), interest rate, and loan term. The formula uses amortization to determine equal monthly payments that pay off both principal and interest over the loan term. Additional costs like property taxes, homeowners insurance, and PMI (if applicable) are added to get your total monthly payment.

What is PMI and when do I have to pay it?

Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home price. PMI protects the lender if you default on the loan. It typically costs 0.5% to 1% of the loan amount annually. Once you reach 20% equity in your home, you can usually request to have PMI removed.

What credit score do I need to buy a home in Texas?

For conventional loans in Texas, most lenders require a minimum credit score of 620. FHA loans may accept scores as low as 500 with a 10% down payment, or 580 with 3.5% down. VA loans typically require 620+. Higher credit scores generally qualify for better interest rates and loan terms.

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Loan Details

Home Price

Median Texas home price is ~$340K

Down Payment ($)

Down Payment (%)

Interest Rate (%)

Loan Term

Additional Costs

Property Tax (%/year)

Texas avg: 1.8%

Home Insurance ($/year)

~$200/month typical

HOA Fees ($/month)

If applicable

Estimated Monthly Payment

$2,408

per month

Principal & Interest

Property Tax

Insurance

PMI

Principal & Interest

$2,208

Property Taxes

$638

Home Insurance

$200

PMI

Loan Amount $340,000

Total Interest Paid $455,028

Total Cost of Loan $795,028

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Amortization Schedule

Year	Principal Paid	Interest Paid	Remaining Balance

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Boost Your Down Payment

A 20% down payment eliminates PMI, saving you hundreds per month. Texas offers several down payment assistance programs for first-time buyers.

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Shop Your Rate

Even a 0.25% difference in interest rate can save you thousands over the life of your loan. Get quotes from at least 3-4 lenders.

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Consider Total Cost

Texas has higher property taxes but no state income tax. Factor in HOA fees, maintenance costs, and utilities for a complete picture.

Last updated: January 27, 2026 | Content reviewed and verified by licensed Texas REALTORS®

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