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PITI (Principal, Interest, Taxes, Insurance)
PITI stands for Principal, Interest, Taxes, and Insurance — the four components that make up your total monthly mortgage payment. PITI is what lenders use to calculate your housing expense ratio.
How It Works
PITI represents your complete monthly housing cost. Principal is the portion that reduces your loan balance. Interest is the cost of borrowing. Taxes are your property taxes (collected monthly via escrow). Insurance includes homeowners insurance and, if applicable, mortgage insurance (PMI or MIP). Many borrowers are surprised that their actual monthly payment is significantly higher than the principal and interest alone. On a $360,000 loan at 6.75%, the P&I payment is $2,335, but after adding taxes ($500/month), insurance ($150/month), and PMI ($150/month), the true PITI is $3,135. Some payments also include HOA fees, making the total even higher. Lenders use PITI to calculate your front-end DTI ratio (PITI ÷ gross monthly income).
Key Facts
P = Principal (reduces your loan balance)
I = Interest (cost of borrowing)
T = Taxes (property taxes, collected via escrow)
I = Insurance (homeowners + mortgage insurance if applicable)
PITI is used to calculate front-end DTI ratio
May also include HOA fees (sometimes called PITIA)
Taxes and insurance can increase annually, raising your total payment
Example
Loan: $360,000 at 6.75% for 30 years. Principal & Interest: $2,335. Property taxes: $500/month. Homeowners insurance: $150/month. PMI: $150/month. Total PITI: $3,135/month. The P&I alone is only 74% of your actual payment.
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Frequently Asked Questions
Your total payment includes property taxes and insurance collected through escrow, and possibly PMI and HOA fees. These can add $500-$1,000+ to your monthly payment beyond the principal and interest.
Yes. While principal and interest stay fixed (on a fixed-rate mortgage), property taxes and insurance premiums change annually. If they increase, your escrow payment — and therefore your total PITI — increases too.