Mortgage Guide & Analysis

Your down payment sets your Loan-to-Value ratio, and LTV sets your rate and your PMI. Stay at or below 80% LTV (20% down) and you skip private mortgage insurance entirely. Above that, PMI pricing is tiered: 0.45% of the loan per year at 85% LTV, 0.70% at 90%, 0.95% at 95%. On a $350,000 loan at 90% LTV, that is about $184 a month of pure insurance cost you can buy down with a bigger down payment.

Fixed P&I keeps every payment identical, which makes budgeting simple. The tradeoff: in year one, roughly 86% of each payment is interest. Decreasing amortization pays the same principal every month and lets interest shrink, so total interest drops significantly - but the first payment is the largest you will ever make. Fixed wins for cash-flow planning; decreasing wins for total cost. Most 30-year buyers pick fixed and attack the balance with extra principal later.

Principal and interest are only half the story. Property taxes run 0.3% to 2.3% of home value a year depending on your county - Texas counties sit near the top at 1.6-2.1% - and homeowners insurance adds $120-$250 a month. A $350,000 home in a 1.6% tax county carries $467 a month in tax alone. Skip these in your math and the house you could afford disappears at closing.