A homeowner carrying a typical mortgage now pays $2,354 a month for housing, and only $1,843 of that payment actually covers the loan itself. The other $511 splits into $311 for property taxes and $200 for homeowners insurance, according to a LendingTree analysis reported in July. A separately built study from Neighbors Bank, using a different set of nearly 450 metro areas, put the average tax-and-insurance add-on at 21% of the monthly payment nationwide, a figure that lines up almost exactly with the LendingTree numbers. Both studies agree on the share; where they diverge is on which piece of that add-on is doing the damage, and in which zip codes.
The Escrow Mechanic That Turns a Locked Rate Into a Moving Payment
Most homeowners with a mortgage never write a separate check for property taxes or insurance the way an owner without a loan does. Loan servicers collect both through an escrow account folded into the monthly mortgage payment, then forward the money to the county and the insurer on their own schedule. That arrangement is why a 30-year fixed-rate loan does not guarantee a fixed monthly bill: when a county reassesses a home or an insurer raises its premium, the servicer adjusts the escrow portion at its annual review, sometimes tacking on a lump-sum shortfall from the prior year.
Property taxes fall heaviest on this group. Homeowners still paying off a mortgage carried a median annual property tax bill of $3,489 in 2024, versus $2,576 for owners who hold their home free and clear, based on a LendingTree analysis of American Community Survey data. Matt Schulz, the company’s chief consumer finance analyst, tied part of the gap to timing: mortgage holders are more likely to have bought recently at an elevated price, which raises the assessed value a county uses to calculate the bill.
The structure also raises delinquency risk. Because the tax and insurance installment rides inside the same bill as principal and interest, a jump in either one raises the whole payment at once instead of arriving as a separate, deferrable invoice. Schulz said that setup “can leave some homeowners struggling with payment increases they weren’t expecting, which raises the risk of missed payments and delinquencies,” and added that mortgage servicers are doing more work managing escrow shortages as a result.
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Where Insurance, Not the Rate, Has Become the Bigger Risk
Insurance premiums drive a growing share of that $511 add-on, and unevenly across the country. Colorado homeowners pay the highest average premium in the nation at $463 a month, or $5,553 a year, a cost LendingTree tied to the state’s exposure to hailstorms and wildfires. Nebraska and Texas rank second and third at $413 and $331 a month; in all three states, frequent hail, wind and hurricane activity has pushed insurers to reprice risk faster than in calmer markets.
In 15 states, homeowners now pay more for insurance than for property taxes, reversing the usual order of the two costs. Tennessee is the starkest example, where the typical homeowner spends about $284 a month on insurance against roughly $143 on property taxes, nearly double. Nebraska and Oklahoma show the same inversion. Insurance takes its smallest bite in Hawaii, at just 2.1% of the monthly payment, and in California, at 3.8%, where state regulation and a steadier claims history hold premiums down even though home values in both states rank among the nation’s highest.
Nationally, insurance premiums rose 45.8% between 2020 and 2025, well ahead of the 26.1% rise in broader consumer prices over the same stretch. The pace has since cooled, with premiums up 6% last year after a 12.7% jump in 2024, but the higher base has not reversed, so the gap between a state like Colorado and a state like Hawaii keeps compounding at each policy renewal.
The 450-Metro Spread, From Honolulu’s 9% to Pensacola’s 44%
The Neighbors Bank study, which priced mortgages across nearly 450 metro areas using a 30-year fixed rate of 6.59%, found the metro-level range is far wider than the 21% national average suggests. In the Pensacola-Ferry Pass-Brent, Florida metro, taxes and insurance make up 43.6% of the average payment, adding $1,183 on top of a $1,531 principal-and-interest payment for a $2,714 total. Decatur, Illinois and Peoria, Illinois follow closely, driven mainly by high property tax rates rather than storm-related insurance costs.
Honolulu sits at the opposite end of the range: taxes and insurance account for just 9% of its average monthly payment, even though the metro’s principal-and-interest payment of $4,243 is among the highest measured. Hawaii funds schools and other public services mainly through revenue sources other than property tax, which keeps rates low regardless of home value. St. George, Utah; Grand Junction, Colorado; and Flagstaff, Arizona show a similar pattern, where newer housing stock and lower tax rates limit the add-on even in otherwise expensive markets.
The two studies were built from different data sets and different mortgage assumptions, yet they land on nearly the same national share, which suggests the roughly one-fifth premium on top of principal and interest has become a structural feature of owning a home with a loan, not a temporary spike tied to one bad renewal cycle. What varies is which cost does the damage in a given zip code: wind and hail exposure across the Plains and Gulf states, fast-rising assessed values in coastal and Sun Belt metros, or, as in Pensacola and Miami, both at once.
For a household that budgeted around the principal-and-interest figure quoted at closing, that distinction decides whether next year’s statement looks like this year’s. An escrow account tied to a hail-prone Nebraska property or a newly reassessed Florida home can move a monthly payment by hundreds of dollars without the loan’s interest rate changing at all, a mechanic that neither the closing disclosure nor the advertised mortgage rate fully captures.
This article was researched and drafted with the assistance of artificial intelligence.
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