Mortgage Payment Breakdown 2026: Where Every Dollar Goes
Most homeowners are shocked to learn that in year one, 87% of their payment goes to interest — not paying off their home. Here's the complete breakdown of every dollar in your mortgage payment, with real numbers for 2026 rates.
David Rodriguez
Refinance & Rate Specialist · 11 years experience
The 4 Components of Your Mortgage Payment (PITI)
Principal
The portion that reduces your loan balance. Starts small (13% in year 1) and grows over time as interest decreases.
Interest
The cost of borrowing money. Calculated monthly on your remaining balance. Dominates early payments (87% in year 1).
Taxes
Property taxes collected monthly and held in escrow. Typically 1-2% of home value per year ($292-$583/month on $350K home).
Insurance
Homeowners insurance + PMI (if down payment < 20%). Homeowners insurance: ~$150/month. PMI: 0.5-1.5% of loan/year.
Real Example: $350,000 Home at 6.85% (Feb 2026)
Here's exactly how a $350,000 home purchase with 10% down ($315,000 loan) breaks down monthly:
| Component | Monthly Amount | Annual Amount | % of Payment |
|---|---|---|---|
| Principal (Year 1 avg) | $268 | $3,216 | 11% |
| Interest (Year 1 avg) | $1,798 | $21,576 | 74% |
| Property Taxes (est.) | $292 | $3,504 | 12% |
| Homeowners Insurance | $150 | $1,800 | 6% |
| PMI (10% down) | $131 | $1,572 | 5% |
| Total PITI + PMI | $2,639 | $31,668 | 100% |
Note: PMI drops off once you reach 20% equity (~year 8 at this rate). Property tax estimate based on 1% of home value.
How Principal vs Interest Changes Over 30 Years
The most important thing to understand about your mortgage: the split between principal and interest changes dramatically over time.
| Year | Monthly Principal | Monthly Interest | Remaining Balance | Equity Built |
|---|---|---|---|---|
| Year 1 | $268 | $1,798 | $311,784 | $38,216 |
| Year 5 | $350 | $1,716 | $293,500 | $56,500 |
| Year 10 | $490 | $1,576 | $267,800 | $82,200 |
| Year 15 | $685 | $1,381 | $232,400 | $117,600 |
| Year 20 | $958 | $1,108 | $183,200 | $166,800 |
| Year 25 | $1,340 | $726 | $114,600 | $235,400 |
| Year 30 | $2,066 | $0 | $0 | $315,000 |
Key insight: Over 30 years on a $315,000 loan at 6.85%, you'll pay $511,560 total — meaning $196,560 in interest alone. That's 62% more than you borrowed. This is why paying extra principal early has such a massive impact.
How Extra Principal Payments Save You Thousands
| Extra Monthly Payment | Years Saved | Interest Saved | Payoff Date |
|---|---|---|---|
| $0 (minimum) | 0 | $0 | 2056 |
| $100/month extra | 2.5 years | $28,400 | 2053 |
| $200/month extra | 4.5 years | $49,200 | 2051 |
| $500/month extra | 9 years | $89,600 | 2047 |
| $1,000/month extra | 14 years | $127,800 | 2042 |
| Bi-weekly payments | 5 years | $58,300 | 2051 |
See Your Exact Payment Breakdown
Get pre-approved and see a full amortization schedule for your specific loan amount and rate.
Compare Lenders & See My Schedule →How Down Payment Changes Your Monthly Breakdown
| Down Payment | Loan Amount | P&I Payment | PMI/month | Total PITI |
|---|---|---|---|---|
| 3% ($10,500) | $339,500 | $2,229 | $212 | $2,804 |
| 5% ($17,500) | $332,500 | $2,183 | $166 | $2,741 |
| 10% ($35,000) | $315,000 | $2,066 | $131 | $2,639 |
| 15% ($52,500) | $297,500 | $1,951 | $62 | $2,455 |
| 20% ($70,000) | $280,000 | $1,836 | $0 | $2,278 |
Based on $350,000 home, 6.85% rate, $292/mo taxes, $150/mo insurance. PMI rate: 0.75% annually.
Frequently Asked Questions
What does PITI stand for in a mortgage?
How much of my mortgage payment goes to interest vs principal?
Can I pay more principal to pay off my mortgage faster?
What is mortgage amortization?
Related Guides
Ready to See Your Full Amortization Schedule?
Get pre-approved and receive a complete payment breakdown showing every month for 30 years.
Get Pre-Approved Free →Takes 2 minutes · No SSN required · No credit impact
David Rodriguez
Refinance & Rate Specialist · NMLS #562847
David has 11+ years of experience in mortgage lending and specializes in helping borrowers understand the true cost of their loans. He has helped over 1,200 homeowners optimize their mortgage strategy.