What’s Included in My Monthly Mortgage Payment?

When buyers first see their projected mortgage payment, they often ask the same thing: “Wait—why is it higher than I expected?”

That’s because your mortgage payment includes more than just the loan itself. In Lubbock, as in most of Texas, your total monthly payment usually bundles four main parts—commonly known as PITI: Principal, Interest, Taxes, and Insurance.

Here’s how it breaks down:

1. Principal:
This is the portion that pays down the amount you actually borrowed. Over time, as your loan balance shrinks, more of your monthly payment goes toward principal and less toward interest.

2. Interest:
This covers the cost of borrowing money. It’s determined by your interest rate, which is why even a small rate change (like 6.5% to 6.25%) can noticeably shift your payment.

3. Taxes:
In Texas, property taxes are collected by the county and paid annually—but your lender divides that total into 12 monthly portions, held in an escrow account. In Lubbock County, property tax rates can range from 1.9% to 2.6%, depending on your school district and location.

4. Insurance:
This includes your homeowner’s insurance premium (and sometimes mortgage insurance, if your down payment is under 20%). It’s also escrowed, meaning your lender collects it monthly and pays it for you annually.

So when you see your monthly payment quoted, it’s typically PITI—a full package designed to keep your taxes and insurance current.

Other potential add-ons include:

• HOA dues, if your neighborhood has a homeowners association (usually billed separately).

• Private Mortgage Insurance (PMI), required for some loans until you reach 20% equity.

• Flood insurance, if the property lies in a designated zone (rare in most of Lubbock).

Understanding your full payment upfront helps you plan realistically—not just for the house, but for your overall monthly comfort.

When I help clients review their pre-approval, I walk through these costs line by line—so you know what’s fixed, what can change, and what’s optional.

Because the goal isn’t just to buy a home—it’s to keep it comfortably.

— Insights from Tess Hernandez, Realtor | Reside Real Estate