What's Actually in Your Monthly Mortgage Payment? PITI Explained (California 2026)

Short answer: your monthly mortgage payment is made up of four parts known as PITI — Principal, Interest, Taxes, and Insurance — plus PMI and HOA dues if they apply to you. The principal and interest pay down your loan; the taxes and insurance are collected into an escrow account and paid on your behalf. In California, property taxes and the rising cost of homeowners insurance make the escrow portion larger than most first-time buyers expect, so understanding each piece keeps you from being blindsided at closing.

P & I: Principal and Interest

This is the loan portion. Principal reduces your balance; interest is the cost of borrowing. On a fixed-rate conventional loan, this part never changes. Early on, most of your payment goes to interest and only a little to principal — that's normal amortization. See how mortgage rates work for why the rate drives this number, and model it in our calculator.

T: Property Taxes

Your lender collects roughly 1/12 of your annual property tax each month and holds it in escrow. In California, the effective rate runs about 1.1%–1.3% of assessed value, and new buyers are reassessed at purchase price — so this line can be substantial. We break down exactly how this works in Proposition 19 and California property taxes.

I: Homeowners Insurance

Also collected monthly into escrow. This is the line that's been climbing fastest in California — the insurance availability and cost crisis we covered in how the insurance crisis affects your mortgage has pushed premiums up and, in some areas, made coverage hard to find. Get a real insurance quote early, because it directly affects your monthly payment and your loan approval.

The two extras: PMI and HOA

If you put less than 20% down on a conventional loan, PMI is added until you reach 20% equity. If your home is in a community with a homeowners association, HOA dues are a separate monthly cost (usually paid directly to the HOA, not through escrow) — but lenders count it in your debt-to-income ratio. In some California condo markets, HOA dues can rival the tax line, so always ask.

Why your payment can change over time

Even with a fixed rate, your total payment can move because taxes and insurance change. If your property tax rises or your insurance premium jumps, your escrow shortfall is spread across the next year and your payment goes up. This is why two buyers with the same rate and loan amount can have very different payments — and why budgeting for the full PITI, not just principal and interest, matters. Before you shop, get pre-approved so you see your real all-in number; see our pre-approval guide.

About this guide: Save Financial is a California-licensed mortgage lender (NMLS #377740, DRE #01875766) serving all 58 counties. For a real, personalized quote, apply online or call 888-703-1840.