Type "$400,000 home, 6.5%, 30 years" into a basic mortgage calculator and it cheerfully reports about $2,025 a month. Then your first real bill arrives at $2,700 — and you wonder what happened. What happened is everything the basic calculator left out: property taxes, homeowners insurance, and possibly PMI and HOA dues. In the US, lenders collect most of these through escrow, so they are part of the check you write every month whether the calculator mentioned them or not.
This guide breaks down the full payment — PITI plus the extras — shows you how to estimate each piece, and walks through a realistic example. Try the numbers yourself in Utilo's free mortgage calculator, which includes taxes, insurance, HOA, and PMI in one breakdown.
PITI: the four parts of your payment
Principal is the chunk of your loan balance you pay down each month. Interest is the lender's charge for the loan. Early in a 30-year mortgage, the payment is mostly interest; the balance barely moves for years — that is normal amortization, not a mistake.
Taxes are your property taxes, and Insurance is homeowners insurance. Your lender estimates both annually, divides by twelve, and collects them with your payment into an escrow account, then pays the bills on your behalf. Together, PITI is the number you should budget around — not principal and interest alone.
How to estimate property tax
Property tax is local, and it varies enormously. The way to estimate it: assessed home value × effective tax rate. Effective rates run from roughly 0.3% in states like Hawaii to over 2% in New Jersey, Illinois, and Connecticut. On a $400,000 home, that is the difference between $100/month and $700/month — enough to change which house you can afford. Check your county assessor's site for the actual rate; many counties publish lookup tools where you can search by address.
Homeowners insurance, realistically
Lenders require it, and for good reason — the house is their collateral. National averages sit around $1,800–$2,400 a year, but coastal Florida or wildfire-zone California can run multiples of that. Get quotes early in the buying process; insurance surprises have killed more than one "affordable" deal. Divide the annual premium by 12 for your monthly figure.
PMI: the under-20% surcharge
Put down less than 20% and most conventional lenders add private mortgage insurance — typically 0.5–1% of the loan amount per year. On a $360,000 loan at 0.6%, that's $180/month. The good news: you can usually request cancellation at 20% equity, and lenders must drop it automatically at 22% of the original value on conformating loans. FHA loans have their own mortgage insurance rules, so check your loan type.
Don't forget HOA dues
Condos, townhomes, and many subdivisions charge monthly HOA dues — $200 to $500 is common, and luxury buildings go far higher. Unlike PMI, HOA dues never go away. Always add them to the payment before deciding what you can afford.
Escrow can change your payment every year
One more surprise for first-time buyers: your PITI payment isn't frozen. Once a year, your lender performs an escrow analysis — comparing what they collected for taxes and insurance against what they actually paid. If your county raised assessments or your insurer raised premiums, the lender bumps your monthly payment to cover the new amounts and make up any shortfall. If bills came in lower, you get a refund check or a lower payment.
The practical lesson: build a cushion into your budget. A payment that feels comfortable today can rise a few percent a year purely from taxes and insurance. Shopping insurance annually and appealing an inflated property assessment are two legitimate ways to fight back.
A worked example: the $400,000 home
Let's put it together. $400,000 price, 20% down ($80,000), 6.5% on a 30-year fixed:
- Principal & interest on the $320,000 loan: ~$2,023/month
- Property tax at 1.2%: $400/month
- Insurance at $1,800/year: $150/month
- PMI: $0 (20% down avoids it)
- True payment: ~$2,573/month — 27% more than principal and interest alone.
Drop to 10% down and you add roughly $180/month in PMI while the loan — and its interest — grows. Small inputs, big swings: that is why the full breakdown matters.
Frequently asked questions
What is PITI in a mortgage payment?
PITI stands for Principal, Interest, Taxes, and Insurance — the four parts of a typical US mortgage payment, with taxes and insurance collected monthly through escrow.
How do I estimate property tax for a home?
Multiply the assessed value by your county's effective tax rate. Rates range from about 0.3% to over 2% across the US, so always check your specific county.
When can I stop paying PMI?
You can usually request cancellation at 20% equity, and lenders must automatically terminate it at 22% of the original property value for conforming loans.
Is homeowners insurance really required?
Yes — virtually all mortgage lenders require it. Budget roughly $1,800–$2,400 per year nationally, more in high-risk states.
Why is my actual payment higher than the calculator showed?
Basic calculators show only principal and interest. Property tax, insurance, PMI, and HOA — collected through escrow — are the usual gap between the estimate and the real bill.