Home insurance Is quietly increasing mortgage payments

Homeowners insurance now averages about $3,057 a year nationally, according to Insurify's annual homeowner insurance report released earlier this month.

This year marks the fifth consecutive year of increases, pushing average prices up by nearly $1,000 since 2021.

When you're buying a home, money spent on insurance premiums can't be spent on the new loan payment.

Keeping your insurance costs low could help you get approved for the loan you need.

...in as little as 3 minutes — no credit impact

How much insurance adds to your mortgage payment

Throughout the 2020s, home insurance premiums have quietly grown as a share of the average mortgage payment. In 2020, the average homeowner spent about 12 cents of every mortgage dollar on insurance. By 2024, that had climbed to 15 cents, and 2026 projections put it around 16.5 cents.

Here's what that looks like in dollar terms on a $350,000 loan at today's average 30-year fixed rate:

Cost component	Approximate monthly amount
Principal & interest	$2,254
Homeowners insurance (national average)	$255
Combined (P&I + insurance)	$2,509

This is an illustrative example based on principal and interest plus the 2026 national average insurance premium; it doesn't include property taxes or PMI, both of which are typically also contribute to a mortgage payment.

Any dollar spent on insurance can't be spent repaying the home loan, so higher insurance costs can erode borrowing power.

Why premiums keep climbing

It's tempting to attribute higher insurance premiums to more frequent storms and wildfires. It's true that climate-related property losses are a real factor driving up premiums.

But the bigger structural driver is less visible: reinsurance costs. This cost, which covers what insurance companies themselves pay to offset their own risk, roughly doubled between 2018 and 2023. Those costs get passed straight through to homeowners' premiums, which is why increases have continued even in years with fewer major disasters.

Construction and materials costs have also risen, which raises the cost to rebuild a home after a claim, and insurers price policies accordingly.

The states paying the most

National averages show the big picture, but local conditions drive most of the difference between what any two homeowners will pay for insurance.

Where you live is a big factor:

• Florida carries the highest average premium in the country, at roughly $8,292 a year, nearly three times the national average, with rates up about 18% in 2025 alone.
• Midwest and Great Plains states have seen some of the steepest increases nationally. Minnesota, Colorado, Iowa, Illinois, Oklahoma, Louisiana, and Michigan have all seen premiums rise more than 35% since 2018, largely tied to hail and severe convective storm risk rather than hurricanes or wildfires.
• States with lower catastrophe exposure have seen far smaller increases. Premiums in the 25 least-expensive states rose only about 5% in 2025, compared to roughly 14% in the 25 most expensive states.

Within each state, insurance costs can vary a lot by ZIP code with coastal or flood-prone areas typically facing higher costs.

How this affects qualifying for and affording a home

When a lender estimates your monthly payment during pre-approval, insurance is usually included as a placeholder based on regional averages.

That estimate can be wrong, especially in higher-risk areas, which is one reason getting an actual insurance quote early in the homebuying process matters.

A higher real premium changes your debt-to-income ratio the same way a higher rate or larger loan would, which can affect how much home you actually qualify for.

If you're mapping out what you can afford, run your numbers through a mortgage calculator that allows a realistic insurance estimate rather than a generic placeholder.

Real estate listings often include recent homeowners insurance costs. If not, check with the listing agent or your own Realtor.

A pre-approval that reflects a real insurance estimate instead of a generic regional placeholder gives you a more accurate sense of your monthly payment before you start making purchase offers.

...in as little as 3 minutes — no credit impact

What you can actually do about rising insurance costs

While you can't control the weather or prevent all wildfires, you can do several things to help keep insurance costs in check:

• Get quotes from multiple carriers rather than accepting your lender's or your closing agent's first recommendation. Premiums for the same property can vary a lot between insurers.
• Work with an independent agent or aggregator: Tools such as Better Cover can make comparing policies faster. Independent agents who don't work for a specific insurer can also help compare policies.
• Raise your deductible: Higher deductibles lower premiums, but use caution here. A deductible that's too high will limit your ability to use the insurance.
• Ask about mitigation credits for things like a newer roof, storm shutters, or a monitored security/water-leak system. Many insurers offer discounts for reducing their risk of a claim.
• Bundle policies: Sometimes using the same insurer for auto and home, for example, can generate savings.
• Get the right insurance policy. If you're buying a condo, you'll typically need an HO-6 policy that covers your unit's interior and belongings and should cost less than a full HO-3 policy on a standalone home.
• Shop in lower cost areas: Insurance costs vary by ZIP code based on factors such as the quality of the local fire department and the chances of fire or storm damage.
• Avoid unnecessary claims: Your claims history affects future insurance costs. If you're dealing with minor damage, like a broken fence or mailbox, consider paying for repairs out of pocket rather than filing a claim.

It's usually smart to revisit your insurance needs every year or two and maybe sooner if your carrier has consistently raised its rates for the same coverage.

Frequently asked questions about home insurance and your mortgage

How much does homeowners insurance actually add to my monthly mortgage payment?

On average nationally, about $255 a month in 2026, which is about 9% of a typical total mortgage payment. The real number for your home depends heavily on location, coverage amount, and the age and condition of the property.

Why does my home insurance keep going up every year even though I haven't filed a claim?

Rate increases are largely driven by rising reinsurance costs (what insurers pay to manage their own risk) and higher rebuilding costs, not just claims history. Insurers price policies based on regional and structural risk factors that apply broadly, so a claim-free record doesn't fully insulate you from rate increases.

I'm buying in Florida. How much more should I budget for insurance compared to the national average?

Florida's average premium is about $8,292 a year, roughly three times the national average of $3,057. Get an actual quote for the specific property before finalizing your budget, since coastal exposure and construction type can push it even higher.

Can rising insurance premiums stop me from qualifying for a mortgage I could otherwise afford?

Yes, potentially. Insurance is factored into your monthly housing payment and debt-to-income ratio, so a materially higher real premium than a lender's placeholder estimate can reduce how much you qualify to borrow, even if your rate and loan amount haven't changed.

Is it cheaper to insure a condo than a single-family house?

Often, yes, since a condo's HO-6 policy typically only needs to cover your unit's interior and personal property, while the building structure is covered by the condo association's master policy.

What's the difference between what my lender estimated for insurance and my actual quote, and which do I budget with?

Lender estimates during pre-approval are typically based on regional averages, not your specific property. Once you have a real quote from an insurer for the actual home, use that number for budgeting.

Bottom line on rising insurance costs

Nationally, average home insurance costs are a growing piece of what it costs to own a home, affecting your monthly payment and your qualifying math just like your rate or loan amount does.

Getting a real insurance quote for a specific property early, and understanding what you can control, gives you a clearer picture of what a home will really cost you each month.

A solid mortgage pre-approval can also help show your homebuying budget.

...in as little as 3 minutes — no credit impact

Figures cited are national averages and industry projections from Insurify's 2026 homeowner insurance report and other cited industry sources, current as of publication. Individual insurance premiums vary significantly by property, location, coverage, and carrier. This article is for informational purposes only and is not insurance or financial advice.