PITI

PITI breaks a monthly mortgage payment into its four components: Principal, Interest, Taxes, and Insurance. Most US homeowners pay all four together in a single monthly bill, with the lender routing the tax and insurance portions into an escrow account on your behalf.

Principal and interest repay the loan itself, following a standard amortisation schedule. Taxes and insurance are pass-through costs the lender collects monthly and pays out annually or semi-annually when the bills come due. The Mortgage Calculator estimates all four pieces together so you see your real monthly housing cost, not just the loan payment.

PITI = Principal + Interest + (Annual Property Tax / 12) + (Annual Insurance Premium / 12)

A $400,000 home with a $320,000 loan at 6.5% for 30 years, $6,000 annual property tax, and $1,800 annual insurance:

• Principal + Interest (from amortisation schedule): ≈ $2,022/month
• Property tax portion: $6,000 / 12 = $500/month
• Insurance portion: $1,800 / 12 = $150/month
• Total PITI ≈ $2,672/month

That's the real monthly cost of homeownership, not just the $2,022 loan payment a quick rate estimate might show.

• Taxes and insurance can change your payment even on a fixed-rate loan. A property tax reassessment or an insurance premium hike adjusts your PITI even though the loan's principal and interest stay locked.
• Lenders use PITI, not just P&I, to qualify you. Debt-to-income calculations in underwriting are based on the full PITI figure, so a lower interest rate alone doesn't tell the whole affordability story.
• Escrow shortages get reconciled annually. If tax or insurance costs rose during the year, expect a one-time shortage payment or a higher monthly PITI going forward to rebuild the escrow cushion.
• PMI isn't part of PITI but often gets added on top. If your down payment is under 20%, private mortgage insurance shows up as a fifth line item alongside PITI, not folded into the "I" for insurance.
• A 30-year and 15-year loan on the same home have very different PITI. The tax and insurance portions stay roughly the same, but a shorter term raises the principal and interest piece substantially.