First-time home buyers have numerous considerations to think about when purchasing a property. Buying a house is a big financial investment loaded with risk, reward and responsibility. One of the most important things to understand before signing on the dotted line is how to calculate mortgage payments and monthly expenses so you can piece together your overall budget. According to the US Department of Housing and Urban Development (HUD), most mortgages consist of four elements: principal amount borrowed, interest, homeowner's insurance and property tax escrow.