A mortgage payment includes the following:

Principal: The amount you are borrowing from your lender.

Interest: The amount it costs to borrow the principal from your lender.

Taxes: Real estate taxes, or local property taxes.

Insurance: Homeowners insurance and sometimes mortgage insurance. Homeowners insurance protects you and your home from things like acts of nature or theft. Mortgage insurance, often referred to as MI, is a factor when you have a deposit that is less than 20% of your home purchase price. MI is sometimes Private Mortgage Insurance (PMI), or Mortgage Insurance Premium (MIP). This designation is connected to what loan product your lender suggests for your purchase.

Principle, Interest, Taxes and Insurance is often abbreviated as PITI

What is an escrow payment?

An escrow payment covers property taxes and insurance (The TI of PITI). Each month a portion of your mortgage payment is placed into an escrow account on your behalf as a protection to you. Taxes and insurance are then deducted from that account on your behalf.