Mike Prenesti, The Mortgage Jedi
16 years helping Las Vegas homebuyers find the right loan. NMLS #1033445.
Buyers frequently budget around a number they saw on a mortgage calculator, principal and interest only, and then get surprised when their actual payment lands meaningfully higher. Here is everything that actually goes into it.
Principal and Interest
This is the core loan payment, the part most calculators show by default. It is the amount actually paying down your loan balance and covering the lender's interest charge. Important, but only one piece of the full picture.
Property Taxes
Almost always collected monthly through an escrow account and paid to the county on your behalf once or twice a year. Nevada's property tax rates are comparatively low next to many other states, which helps, but the number is still real and needs to be included in your budget, not treated as a rounding error.
Homeowners Insurance
Also typically collected through escrow, this covers rebuilding your home and protecting your liability as a homeowner. As discussed elsewhere, this can vary based on the home's age, value, and specific location, and it is worth getting a real quote before finalizing your budget.
Mortgage Insurance, If Applicable
FHA loans carry mortgage insurance premiums, often for the life of the loan. Conventional loans with less than 20% down carry private mortgage insurance until you reach roughly 20 to 22% equity. VA loans do not carry monthly mortgage insurance at all. This piece varies significantly by loan program and down payment, and it is worth understanding exactly how it applies to your specific loan.
HOA Dues, If Applicable
Many communities across this valley, especially newer developments, carry monthly or quarterly HOA dues. This is not collected through your mortgage escrow, it is a separate bill, but it absolutely affects your total monthly housing cost and needs to be part of your budget from the start.
Putting It All Together: PITI Plus HOA
Lenders refer to the core payment as PITI, principal, interest, taxes, and insurance. Add HOA dues on top if applicable, and that total is your real monthly housing cost, not just the principal and interest number a quick online calculator shows you.
Budgeting Beyond the Mortgage Payment Itself
Beyond PITI and HOA, build in a realistic maintenance fund, commonly estimated around 1% of your home's value annually, for repairs and upkeep that a landlord would have handled for you as a renter. Utilities also tend to run higher in a home than an apartment, worth factoring in if you are transitioning from renting.
Get Your Real Number Before You Shop
The biggest budgeting mistake is shopping for homes based on an incomplete payment estimate. Get your full PITI plus HOA number calculated accurately before you start touring homes, so you are searching in a price range that actually fits your real monthly budget.
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