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What Is a Mortgage Payment?
A simple breakdown of what your monthly mortgage payment includes.
Overview
A mortgage payment is the amount you pay each month to repay your home loan. It typically includes principal, interest, taxes, and insurance. This guide explains each part of the payment, how it’s calculated, and what can make it go up or down over time.
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What a Mortgage Payment Includes
- Principal: reduces your loan balance
- Interest: cost of borrowing
- Taxes: property taxes collected through escrow
- Insurance: homeowners insurance collected through escrow
- Mortgage insurance (if required)
Principal + Interest (P&I)
- The core of your mortgage payment
- Based on your loan amount, rate, and term
- Fixed-rate loans keep P&I the same
- ARM loans can change when the rate adjusts
Taxes and Insurance (Escrow)
- Collected monthly and held by your lender
- Lender pays taxes and insurance when due
- Amount can change yearly
- Escrow analysis adjusts your payment if needed
Mortgage Insurance
- Required on some loans
- Protects the lender
- Applies to conventional loans under 20% down
- FHA loans include mortgage insurance premiums
What Can Change Your Payment
- Property tax increases
- Homeowners insurance changes
- Escrow shortages
- ARM rate adjustments
- Refinancing to a new loan
How to Lower Your Payment
- Refinance to a lower rate
- Remove PMI when eligible
- Shop for lower insurance premiums
- Extend your loan term (refinance)
Next Steps
- Review your current payment breakdown
- Check your escrow balance
- Compare today’s mortgage rates
- Explore refinance options if your payment is high
Get a personalized mortgage payment review to see how much you can save.
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