When a lender evaluates your mortgage application a big factor they consider is your estimated future housing expense.

This housing expense is broken down into the following areas:

your first mortgage loan

your second mortgage loan (if any)

hazard insurance

mortgage insurance

property taxes

home ownership association dues

miscellaneous expenses

First mortgage loan

This is the projected monthly expense of your first mortgage on the property. The lender often uses a "qualifying rate" which is an interest rate they use in their calculations to see if you qualify for the size payment you are looking for.

Second mortgage loan

This is the monthly payment on your second loan, if you will have one.

Hazard insurance

This is the monthly payment for the hazard insurance policy on the property. This policy covers the policy holder in the event the property is destroyed or damaged.

Mortgage insurance

This is an insurance payment required by some lenders when the loan amount is very high as a percentage of the property's value. When a buyer puts down no or a small down payment the lender may charge this additional amount to offset their risk.

Property taxes

This is the monthly expense of the property's annual property tax burden.

Home ownership association dues

These are the monthly dues for the home ownership association, if there is one. These dues can be for property maintenance such as lawn mowing and grounds keeping.

Miscellaneous expenses

These are any other housing related expenses.