How to Calculate Your Total Monthly Payments When Buying a Home

Published on March 7, 2022 under How-To

  • Share
  • Share on Facebook
  • Share on X
  • Share on Linkedin

Buying a home takes your household and your finances to the next level. You are putting down roots and also investing in a long-term loan. You are becoming a homeowner and also committing to the monthly costs of living in your home. This means that buying a home also means calculating all the monthly payments, from the mortgage payments to the internet bill.

Anyone getting ready to buy a home should consider each property not only by its listing price, but also by what it would cost for utilities, taxes, insurance, and local services that your family will subscribe to like internet, phone, and even delivery.

New homeowners and even experienced homeowners can benefit from this useful checklist.

Every Monthly Fee After Buying a Home

  • Mortgage
  • Insurance
  • Property Tax
  • Utilities
  • Local Services

Utility Costs

Start with utilities; your water, power, gas (if any), and sewage connection. Trash or mail may cost a fee. Today, it's reasonable to include phone and internet in your utility calculations as well. This will tell you the cost to keep your home livable and functional. No one can live in a home without paying these monthly utilities.

Utility companies vary from region to region, with different policies and seasonal pricing. Utility costs will change depending on the lines to your home, the local weather conditions, and local providers. So this is a research project worth doing.

HOA or Condo Association Fees

Over 70% of homes moving through the market belong to a homeowner's association. This means there is a high chance that when your dream home comes on the market that it, too, will be in an HOA or condo association. These communities share co-ownership. Every homeowner shares responsibility, control, and cost for shared amenities like pools and fitness centers.

Depending on the neighborhood or building, HOA or Condo fees can range between $100 to $1000.

Property Taxes

Homeownership means taking responsibility for the home's property taxes. This is a percentage of the assessed value of the home (not the market price) that a homeowner pays every year to pay for the infrastructure like roads, pipes, and schools used by local homes.

Your state, region, and home value will determine how you calculate the property tax. The same percentage value of your home is paid every year.

Property Tax = Local Tax Rate x Assessed Home Value paid annually

Mortgage Payments

Usually the first cost calculation done for home buying is mortgage payments. How much would you pay monthly for a home loan of X size with Y downpayment? The mortgage often serves as your core monthly expense after buying a home. Each mortgage deal is potentially unique so only your specific combination of home value, loan size, interest rate, and down payment amount will determine your final monthly payment.

Mortgage Insurance

If you put down less than 20% in your downpayment, you will need to get mortgage insurance. This is insurance that pays the bank if the home forecloses. However, you can drop mortgage insurance after you reach 20% equity. Remember to calculate for the monthly premiums of mortgage insurance until that point.

Homeowner's Insurance

Homeowner's insurance secures your home from disaster, criminal activity, and liability. Most homeowners need a combination policy that covers both the core homeowners insurance package, plus add-ons like flood insurance or even guaranteed replacement coverage when there is an increased local or circumstantial risk.

Homeowners insurance is usually non-optional while holding a mortgage, but it's also a necessary safety net for those uncontrollable disasters outside of our control. Of course, it, too, comes with a monthly cost.

Local Services

Finally, don't forget to calculate the monthly cost of living outside of the otherwise specified categories. What other costs do you need to adjust for each month? Many families have prescription medical costs that might change from region to region. You may need a gym membership and need to calculate local gym prices into your monthly budget. Buying a house is a serious commitment; not just to a place, but to a budget. This outline will help you determine not only your budget for completing your home purchase, but also your real monthly income to expenses budget after moving into your new home. Contact our expert loan officers to get pre-qualified on the first step to home loan options.

Contact an Expert Loan Officer