Private Mortgage Insurance (PMI) is required on many conventional loans when the down payment is less than 20%. PMI protects the lender, not the borrower. You may avoid PMI with a larger down payment, certain loan programs, or by refinancing once you build enough equity.
Closing costs typically range from 2% to 5% of the purchase price and include lender fees, appraisal, title insurance, and prepaid items like taxes and homeowners insurance. Some buyers may be able to negotiate seller concessions or lender credits to offset these costs.
DTI compares your monthly debt payments to your gross monthly income. Lenders use this ratio to determine your ability to repay a mortgage. A lower DTI can improve your chances of approval and help you qualify for better loan terms.
A monthly mortgage payment typically includes principal, interest, property taxes, and homeowners insurance (PITI). Depending on the loan, it may also include mortgage insurance or HOA dues. Understanding your full payment helps with accurate budgeting.
