What Is Included in a Mortgage Payment? PITI (2026)
A typical mortgage payment has four parts, known together as PITI: principal, interest, property taxes, and homeowners insurance. ClozeEZ estimates the property tax line for Arizona homes from Maricopa County Assessor parcel data. Principal reduces your loan balance, interest is the lender's charge for the money, and lenders usually collect the tax and insurance portions in an escrow account and pay those bills for you. Two costs sit outside PITI but hit the same monthly budget: mortgage insurance if your down payment was under 20 percent, and HOA dues if the community has an association.
Principal and interest: the part that is actually the loan
Principal reduces what you owe. Interest is what the lender charges. On a fixed-rate loan the combined principal-and-interest amount stays the same every month for the life of the loan, but the split shifts: early payments are mostly interest, and the balance tips toward principal over time.
This is why a mortgage balance drops slowly at first. In the first few years of a 30-year loan, the large majority of each payment is interest, which is also why extra principal payments early in the loan save disproportionate amounts of total interest.
Taxes and insurance: the part that changes
Property tax and homeowners insurance are collected monthly into escrow and paid on your behalf when due. Because both change year to year, your total payment changes even on a fixed-rate loan. Lenders re-analyze escrow annually and adjust, which is why a payment can rise without your rate changing at all.
For Arizona specifically, property tax is one of the lowest burdens in the country: an effective rate around 0.48 percent, with Maricopa County's median annual bill running about $1,983. Arizona also caps annual growth in a property's taxable Limited Property Value at 5 percent under Proposition 117, so bills do not track a hot market dollar for dollar. Homeowners insurance runs near the national middle, averaging about $2,397 a year in the 2026 Quadrant study.
What is not in PITI but still due every month
Private mortgage insurance applies to conventional loans with less than 20 percent down and protects the lender, not you. It typically drops off once you reach roughly 20 to 22 percent equity, though the rules differ by loan type; FHA loans carry their own mortgage insurance premium that often lasts the life of the loan.
HOA dues are separate from your mortgage entirely and are paid to the association, not the lender. Lenders count them when qualifying you, so they affect how much you can borrow even though they never appear in your mortgage payment. In some Arizona communities dues are modest; in amenity-heavy master plans and age-qualified communities they can run into the hundreds per month.
Also budget outside the payment: utilities, maintenance, and in some communities a separate special assessment. Older homes and pool properties carry maintenance costs that a payment calculator never shows.
A realistic Arizona example
On a $450,000 Phoenix-area home with 20 percent down, financing $360,000 at around 6.65 percent on a 30-year fixed, principal and interest comes to roughly $2,310 a month. Add property tax at Arizona's effective rate, about $180 a month, and homeowners insurance at roughly $200 a month, and the PITI payment lands near $2,690.
With 10 percent down instead, the loan grows to $405,000, principal and interest rises to about $2,600, and mortgage insurance adds perhaps $135 to $200 a month until you reach the equity threshold. Add HOA dues if applicable. These are illustrations, not quotes; get an actual loan estimate from a lender, which itemizes every line.
Frequently asked questions
What does PITI stand for?
Principal, interest, taxes, and insurance: the four components of a typical monthly mortgage payment. Principal and interest repay the loan; taxes and insurance are usually collected into an escrow account and paid on your behalf.
Why did my mortgage payment go up if I have a fixed rate?
Almost always escrow. Property taxes or homeowners insurance rose, so the lender's annual escrow analysis increased the monthly amount collected. Your principal-and-interest portion on a fixed-rate loan does not change.
Are HOA dues part of my mortgage payment?
No. HOA dues are paid separately to the association, not to your lender. Lenders do count them when calculating what you qualify for, so they affect your borrowing power even though they never appear in the mortgage payment itself.
When does PMI go away?
On a conventional loan, private mortgage insurance typically ends once you reach roughly 20 to 22 percent equity, either by request or automatically. FHA loans work differently; their mortgage insurance premium frequently lasts the life of the loan unless you refinance.
How much are property taxes in Arizona?
Among the lowest in the country. Arizona's effective rate on owner-occupied housing is about 0.48 percent, and Maricopa County's median annual bill is roughly $1,983. Arizona's Proposition 117 also caps annual growth in the taxable Limited Property Value at 5 percent.