PITI: Principal, Interest, Taxes, and Insurance
What Is PITI?
PITI stands for Principal, Interest, Taxes, and Insurance — the four components that typically make up a full monthly mortgage payment.
When lenders evaluate affordability, they don’t just look at principal and interest. They consider the total housing cost, including:
Principal → Loan balance repayment
Interest → Cost of borrowing
Property Taxes → Local government taxes
Insurance → Homeowners insurance (and sometimes mortgage insurance)
PITI represents your true monthly housing obligation.
Why PITI Matters in a Mortgage
PITI determines:
- Your monthly payment
- Debt-to-income (DTI) ratio
- Loan approval eligibility
- Affordability and sustainability
Underwriting guidelines often assess housing costs as a percentage of income. Programs influenced by entities such as Fannie Mae evaluate total PITI, not just loan payment.
Ignoring taxes and insurance can cause buyers to underestimate real costs.
How PITI Works
House Example:
- Home Price: $400,000
- Down Payment: $80,000
- Loan: $320,000
PITI Example:
- Principal & Interest: $1,900
- Taxes: $400
- Insurance: $150
Total PITI: $2,450
That is the full monthly obligation.
FAQs About PITI
Does PITI include HOA fees?
No, though lenders may consider them separately.
Can PITI change over time?
Yes, taxes and insurance can increase.
Is PITI used in DTI calculations?
Yes.
Related Terms
