Buying a home is one of life’s biggest milestones, and for most homeowners, it comes with the comfort of a predictable monthly mortgage payment—especially with a fixed-rate loan. So when that payment unexpectedly increases, it’s natural to wonder: why is my mortgage payment going up?
Understanding the reasons behind these changes helps you plan, budget, and avoid surprises in the future. Below, we’ll break down the most common causes of rising mortgage payments, plus practical steps to lower them.
Common Reasons Your Mortgage Payment Increases
A higher mortgage bill doesn’t always mean you’ve done something wrong. Even if you’ve never missed a payment, changes to taxes, insurance, or loan terms can all impact your monthly amount.
1. Escrow Account Adjustments
Most lenders include an escrow account in your mortgage to collect funds for property taxes and homeowners insurance. When either of these costs increases, your escrow portion must rise to keep up.
Each year, your lender performs an escrow analysis to ensure enough funds are available. If there’s a shortfall, they’ll spread the difference across future payments—raising your monthly total.
Tip: Review your annual escrow statement carefully to understand what’s changing and why.
2. Property Tax Increases
Your property taxes can change when your local government reassesses your home’s value. Rising property values, new assessments, or the loss of a tax exemption can all lead to a higher tax bill.
That increase gets passed directly to your escrow account—and therefore, to your mortgage payment.
Example: If your tax bill increases by $240 annually, your lender might add about $20 per month to your mortgage payment to make up the difference.
3. Rising Homeowners Insurance Premiums
Homeowners insurance is required by your lender to protect their investment and your property. Premiums can rise for several reasons:
You’ve upgraded or remodeled your home.
You’ve increased coverage limits.
You’ve switched to a new insurance provider.
Your region faces higher risk (storms, wildfires, etc.).
Even small increases can affect your escrow balance. For instance, a $120 annual premium increase adds $10 a month to your payment.
Tip: Shop insurance providers regularly to ensure you’re getting the best rate without sacrificing coverage.
4. Adjustable-Rate Mortgage (ARM) Resets
If you have an adjustable-rate mortgage, your initial interest rate is only fixed for a limited time (commonly 3, 5, or 7 years). Once that period ends, your rate “resets” based on current market conditions.
If rates have increased since you first locked in your loan, your monthly payment could rise sharply.
If rates drop, you might see a decrease.
What influences ARM changes:
Inflation and federal interest rate hikes.
Economic conditions and bond market shifts.
Federal Reserve policy changes.
5. Expired Servicemember Benefits
Active-duty military members are protected under the Servicemembers Civil Relief Act (SCRA), which caps mortgage interest rates at 6%. When active duty ends, that rate returns to its original level, increasing monthly payments.
How to Lower Your Monthly Mortgage Payment
The good news is that there are several effective ways to bring your mortgage payment back down. Here’s how smart homeowners tackle rising costs.
1. Remove Private Mortgage Insurance (PMI)
If you bought your home with less than 20% down, you’re likely paying PMI. Once you reach 20% equity, you can request its removal. This can save you hundreds of dollars each month.
For FHA loans, mortgage insurance may last 11 years—or even the life of the loan—unless you refinance into a conventional loan.
2. Refinance to a Lower Rate or Longer Term
Refinancing can help you:
Lock in a lower rate if market rates have dropped.
Extend your loan term to reduce monthly payments (though you’ll pay more interest over time).
Switch loan types, such as from ARM to fixed-rate for stability.
Always compare refinancing costs against your potential savings and consult a mortgage professional before deciding.
3. Shop Around for Homeowners Insurance
Your insurance premium directly impacts your escrow account. Getting quotes from multiple insurers can help reduce your overall payment.
Ways to save:
Bundle home and auto policies.
Increase your deductible (if financially safe).
Ask about loyalty or security-system discounts.
4. Appeal Your Property Tax Assessment
Many homeowners pay more in property taxes than necessary. According to the National Taxpayers Union Foundation, about 60% of homes are over-assessed—but only 5% of owners appeal.
Steps to appeal your property taxes:
Review your assessment notice for errors.
Research comparable home values in your area.
Submit an appeal before the local deadline.
Provide documentation or hire an independent assessor.
A successful appeal can lead to long-term savings on both taxes and your monthly mortgage.
Frequently Asked Questions About Rising Mortgage Payments
1. Why does my mortgage keep increasing even with a fixed-rate loan?
Your principal and interest don’t change with a fixed-rate mortgage—but property taxes and insurance do. When those costs rise, your lender adjusts your escrow amount, making your total monthly payment higher.
2. How often can my mortgage payment change?
Lenders typically review escrow accounts once per year. If your taxes or insurance costs increase, expect your payment to rise after that annual review.
For ARM loans, your interest rate may adjust annually or semi-annually after the fixed period ends.
3. Can I prevent my mortgage payment from going up?
Not entirely—but you can limit the impact by:
Shopping for cheaper homeowners insurance.
Appealing inflated property tax assessments.
Removing PMI once you reach 20% equity.
Refinancing to a fixed-rate loan for payment stability.
4. Why did my escrow shortage raise my payment?
If your escrow account doesn’t have enough funds to cover taxes or insurance, your lender spreads the shortage across the next 12 months. This keeps your account balanced and ensures future bills are paid on time.
5. Will refinancing lower my mortgage payment?
Yes. Refinancing can reduce your payment by securing a lower interest rate, extending your loan term, or removing mortgage insurance. It can also convert an ARM into a fixed-rate mortgage for long-term predictability.
Final Thoughts
A rising mortgage payment can be stressful—but understanding the causes gives you the power to act. Regularly review your escrow statements, monitor insurance premiums, and stay aware of local tax changes. With proactive steps like refinancing or appealing your property taxes, you can protect your budget and maintain financial peace of mind in your home.
King & Edge Real Estate Agents in Boise, Idaho
As experienced Boise real estate agents, we are honored to have the opportunity to serve you and be a part of your real estate journey. Let us guide you towards a successful and rewarding experience, where your goals become our goals, and your vision becomes a reality. Contact us today and discover the unparalleled service and expertise that sets King & Edge Real Estate apart as we help you sell your home in Boise or find your place to call home.
// View Our Portfolio of Listings
Stacey King Boise Real Estate Agent
Raised in a family engaged in custom building and real estate appraisal, Stacey was destined for a career in real estate. Moving to Boise in 2010, she developed a deep love for the area, purchasing her first home in 2016, a step that ignited her passion to help others experience the transformative power of homeownership. Stacey has built her business on integrity, exceptional client experience, meaningful relationships, and community investment. She dedicates a portion of each commission to support local and global charities, with a special passion for the Women’s and Children’s Alliance, aiding victims of domestic abuse. Stacey’s commitment to her clients and her community has paved the way for enduring friendships and a fulfilling career.
