Why Does My Mortgage Keep Going Up?

Once you buy a home, you expect your mortgage payment to stay steady, especially if you have a fixed-rate loan. But for many homeowners, the amount due each month can creep up over time, leaving you asking: “Why did my mortgage payment go up?”

Whether you’re paying off a home in Denver, CO or managing your home in Orlando, FL, this Redfin article explains the most common reasons mortgage payments rise, plus steps you can take to lower them.

Why did my mortgage payment go up?

A higher monthly mortgage bill doesn’t always mean you’ve made a mistake. Mortgage payments can increase even if you’ve never missed a payment. In most cases, your principal and interest stay the same, but your escrow portion can change. Here are the most common culprits:

1. Escrow account changes

Most lenders set up an escrow account to collect money for property taxes and homeowners insurance. If those bills go up, your lender increases the escrow portion of your payment, even though your principal and interest don’t change.Each year, lenders perform an escrow analysis—and if there’s a shortfall, your payment will rise to cover the difference.

>>Read: What is Escrow?

2. Property tax increases

Local governments can reassess your home’s value, raising your property taxes. If your tax bill increases, or if you lose a property tax exemption, your escrow contribution goes up, too. That change gets passed directly into your monthly mortgage.

Example: If your escrow account is short $240, your lender may add $20 per month to your mortgage for the next year.

3. Homeowners insurance premium hikes

Homeowners insurance is required by lenders to protect their investment. Premiums can rise if you:

• Switch providers
• Add more coverage
• Renovate or upgrade your home
• Live in an area with rising claims or climate-related risks

When premiums increase, your escrow account needs more money—causing your monthly payment to rise. For example, if your annual premium increases by $120, your lender may add $10 to your monthly mortgage payment.

4. Adjustable-rate mortgage (ARM) resets

If you have an adjustable-rate mortgage, your initial interest rate is only locked for a set time (commonly 3, 5, or 7 years). Once the fixed period ends, your rate adjusts annually or semi-annually. If rates are higher than when you started, your monthly mortgage can jump significantly. However, if rates drop, your payment could decrease.

Inflation, changes to the federal funds rate, or broader market conditions can all trigger higher mortgage rates.

5. Expired servicemember benefits

Active-duty military members are protected under the Servicemembers Civil Relief Act (SCRA), which caps mortgage rates at 6%. Once your active duty ends, your loan reverts to the original higher rate in your agreement, raising your payments.

How can I lower my monthly mortgage payment?

The good news: just as payments can rise, there are ways to bring them back down. Here are practical steps homeowners take:

1. Remove mortgage insurance

If you purchased with less than 20% down, you likely pay private mortgage insurance (PMI). Once you reach 20% equity, you can request removal. Check your loan statement or ask your lender to confirm your current equity. Eliminating PMI can lower your monthly bill by hundreds of dollars.

FHA loans are trickier: mortgage insurance often lasts 11 years or the life of the loan unless you refinance into a conventional loan.

2. Refinance your loan

Refinancing can lower your payment by:

• Locking in a lower interest rate if rates drop
• Extending your loan term to spread costs over more years (though this can increase total interest paid)
• Switching loan types (e.g., ARM to fixed-rate or FHA to conventional)

Consult with a mortgage professional to calculate savings. 

>>Read: Should I Refinance My Mortgage?

3. Shop around for homeowners insurance

Switching providers or adjusting coverage can lower premiums and reduce escrow requirements. Just make sure your coverage still protects your property adequately.

>>Read: How Much Homeowners Insurance Do You Need?

4. Appeal your property tax assessment

According to the National Taxpayers Union Foundation, up to 60% of homes are over-assessed—but only 5% of owners appeal. If you suspect your home’s tax value is too high, you can:

• Check your local appeal deadline
• Hire a third-party assessor or work with a real estate agent
• Present evidence to your local tax appeals board

A successful appeal can reduce your taxes—and your mortgage payment.

Frequently asked questions about rising mortgage payments

1. Why does my mortgage keep going up if I have a fixed-rate loan?

Even with a fixed-rate mortgage, your principal and interest stay the same, but your escrow account costs, like property taxes and homeowners insurance, can rise. That’s usually why your payment increases even though your rate hasn’t changed.

2. How often can my mortgage payment change?

Your lender typically reviews your escrow account annually. If there’s a shortage, your payment may increase once a year. However, if you have an adjustable-rate mortgage (ARM), your interest rate, and payment, could change annually or semi-annually once the fixed period ends.

3. Can I stop my mortgage payment from going up?

You can’t control tax assessments or insurance premiums, but you can shop around for insurance, appeal your property tax assessment, or refinance to stabilize your payment. Removing PMI once you reach 20% equity is another way to prevent unnecessary increases.

4. Why did my escrow account shortage raise my mortgage?

If your escrow account doesn’t have enough funds to cover property taxes or insurance, your lender spreads the shortage across future monthly payments. This keeps your account from falling behind and ensures bills are paid on time.

5. Will refinancing lower my mortgage payment?

Yes, refinancing into a lower rate or longer term can reduce your monthly payment. You can also refinance to remove FHA mortgage insurance or switch from an ARM to a fixed-rate loan for more stability.

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