What Are Property Taxes and How Are They Calculated?
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
1. Property Taxes Fund Local Services
Property taxes are local taxes based on the value of your home and land. They help fund essential public services like:
- Schools
- Roads and infrastructure
- Police and fire departments
Parks and libraries
Even though you’re paying them, these taxes benefit your entire community—and that’s why they’re required annually.
Understanding property taxes is crucial for budgeting. Use our loan calculators to estimate your complete monthly payment including taxes, insurance, and principal and interest.
2. Tax Rates Are Set by Your Local Government
Your property tax bill is based on two things:
- The assessed value of your home (not necessarily the same as your purchase price)
Your local property tax rate, which varies widely from one city or county to another
For example, if your home is assessed at $300,000 and your local rate is 1.25%, your annual property tax would be $3,750. These taxes are often built into your monthly mortgage payment and held in your escrow account.
Calculate your full monthly payment including property taxes with our FHA Purchase Loan or Conventional Purchase Loan calculator to see the complete picture of homeownership costs.
3. Property Taxes Can Change Every Year
Just like home values, your property’s assessed value may go up or down, which can cause your tax bill to increase. Local governments may also vote to raise the rate. That’s why it’s smart to review your annual assessment notice and stay informed—especially if you live in an area with rising property values.
Plan for potential tax increases by exploring our first-time buyer resources to understand all ongoing homeownership costs beyond your mortgage payment.
Want to Understand Your Complete Monthly Homeownership Costs Including Property Taxes?
Property taxes are just one piece of your monthly budget. Here’s how to see the full picture:
💰 Calculate complete monthly payments with FHA Purchase Loan or Conventional Purchase Loan calculators
⚡ Get same-day approval with detailed breakdowns of taxes and insurance for your specific area
📊 Explore all ownership costs at our buy a house page
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