What goes into your monthly house payment
Your monthly house payment has four parts, often called PITI: principal, interest, taxes, and insurance. Principal is the amount you borrowed that you pay back each month. Interest is what the lender charges you for lending that money. Property taxes go to your local government. Homeowners insurance protects your house if it burns down or gets damaged.
Most people pay all four together in one monthly bill. If you put down less than 20 percent when you bought the house, you'll also pay PMI (private mortgage insurance), which protects the lender if you stop paying. That gets added to your monthly bill too.
The principal and interest part stays the same every month for a fixed-rate mortgage — that's the most common type. The taxes and insurance can go up or down depending on your area and your insurance company.
Key Takeaways
- Your monthly payment includes principal, interest, property taxes, homeowners insurance, and possibly PMI — you can calculate the first two using your loan amount, interest rate, and loan length.
- Property taxes and insurance change based on where you live and your specific house, so you need to contact your local assessor and insurance company for those numbers.
- An online mortgage calculator will do the math for you if you enter your loan amount, interest rate, and loan term — the result is your principal and interest payment.
- Your lender can tell you the exact total payment amount, including taxes and insurance, because they know all four pieces of information.
How to find your principal and interest payment
The principal and interest part is the hardest to calculate by hand, so most people use an online mortgage calculator. You'll need three numbers: the amount you borrowed (called the loan amount, which is the house price minus your down payment), your interest rate, and the loan term (usually 15 or 30 years).
Go to any mortgage calculator website — your bank's website often has one, or you can search "mortgage calculator" in any search engine. Enter those three numbers and it will show you the principal and interest payment. For example, if you borrowed $300,000 at 6.5 percent interest over 30 years, the calculator will tell you that part of your payment is roughly $1,896 per month. That number stays the same for the entire 30 years if your interest rate is fixed.
If you want to do the math yourself, the formula exists, but it's complicated enough that a calculator is faster and more accurate. Your lender can also tell you this number — it's on your loan documents or they can email it to you.
How to find your property tax payment
Property taxes vary wildly depending on where you live. Some areas charge 0.3 percent of your home's value per year; others charge 2 percent or more. You need to contact your local assessor's office to find out what your house is assessed at and what the tax rate is in your area.
Search online for "[your county name] assessor" or "[your city name] property tax" and you'll find the office. Call them or visit their website — they can tell you the annual property tax on your specific address. Divide that number by 12 to get your monthly payment. For example, if your annual property tax is $3,600, your monthly payment toward taxes is $300.
Your lender collects this money from you each month and holds it in an account called an escrow account, then pays the tax bill when it's due. You don't pay the assessor directly.
How to find your homeowners insurance payment
Homeowners insurance protects your house and your belongings if there's a fire, theft, or weather damage. The cost depends on your house's value, its age, where it's located, and what kind of coverage you choose. You need to contact insurance companies directly for a quote.
Search online for "homeowners insurance quotes" or call a few insurance companies in your area. Tell them your address and the value of your house, and they'll give you a yearly price. Divide that by 12 to get your monthly payment. For example, if insurance costs $1,200 per year, that's $100 per month.
Like property taxes, your lender collects this from you each month and pays the insurance company when the bill comes due. You don't pay the insurance company directly — the money goes into your escrow account first.
How to find your PMI payment (if you have it)
PMI is only required if you put down less than 20 percent of the house price. If you put down $60,000 on a $300,000 house, that's 20 percent, so you don't pay PMI. If you put down $50,000, that's less than 20 percent, so you do.
PMI costs roughly 0.5 to 1.5 percent of your loan amount per year, but the exact rate depends on how much you put down and your credit score. Your lender can tell you the exact PMI payment — it's on your loan documents. Divide the yearly amount by 12 to get the monthly payment.
You can stop paying PMI once your loan balance drops to 80 percent of the house's original value. That usually happens after 8 to 10 years of payments, but it depends on your loan. Ask your lender when you can request to have PMI removed.
Putting all four parts together
Once you have all four numbers, add them up. Here's an example: principal and interest is $1,896, property taxes are $300, homeowners insurance is $100, and PMI is $150. Your total monthly payment is $2,446.
This is the amount that comes out of your bank account each month. Your lender sends the taxes and insurance to the right places from your escrow account, and keeps the principal and interest to pay off your loan.
If any of these numbers change — your property is reassessed, your insurance company raises rates, or your interest rate adjusts (if you have an adjustable-rate mortgage) — your payment will change too. Your lender will tell you about changes to taxes and insurance. If you have an adjustable-rate mortgage, your lender will notify you when your interest rate changes.
When to ask your lender for the exact number
Your lender knows all four pieces of information and can give you the exact total payment in one number. If you're shopping for a house, ask the lender for a Loan Estimate — that's a form that shows your principal and interest, property taxes, insurance, PMI, and the total monthly payment. By law, lenders must give you this form within three days of you asking for a loan.
If you already have a mortgage and want to know your exact payment, call your lender or log into your online account. Your monthly statement shows the breakdown of principal, interest, taxes, and insurance.
Don't rely on estimates from real estate agents or online calculators for the final number — they're useful for planning, but your lender's official form is what actually matters.
Frequently Asked Questions
Does my payment change every month?
The principal and interest part stays the same if you have a fixed-rate mortgage. Property taxes and insurance can change once a year when they're reassessed or when your insurance company renews your policy. Your lender will tell you if your monthly payment is going up or down.
What if I pay extra toward principal?
If you send extra money to your lender and specify it goes toward principal, you'll pay off the loan faster and pay less interest overall. Your monthly payment doesn't have to change — the extra is on top of it. Ask your lender if there are any penalties for paying extra.
Can I lower my monthly payment?
You can refinance your mortgage to a lower interest rate or longer loan term, which lowers your monthly payment. You can also shop for cheaper homeowners insurance. You can't change your property taxes, but you can appeal your home's assessed value if you think it's too high. Talk to your lender about refinancing options.
What's the difference between a fixed-rate and adjustable-rate mortgage?
A fixed-rate mortgage keeps the same interest rate and principal-and-interest payment for the entire loan — usually 15 or 30 years. An adjustable-rate mortgage starts with a lower rate for a few years, then the rate goes up or down based on market conditions, so your payment changes. Fixed-rate is more predictable; adjustable-rate is riskier but cheaper at first.
Is there a way to avoid PMI?
You avoid PMI by putting down 20 percent or more. If you can't do that now, you can refinance later once your loan balance drops to 80 percent of the house's value. Some lenders offer programs where you pay a higher interest rate instead of PMI — ask your lender if that's an option.