PITI

Loan & Credit

Principal, Interest, Taxes, and Insurance

The four components that make up a typical US monthly mortgage payment: loan principal, interest, property taxes, and homeowners insurance, often bundled into one payment.

What is 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.

Formula

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

Worked Example

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.

Key Things to Know

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.

Related Calculators

Mortgage Calculator →Calculate your monthly mortgage payment, total interest, and amortisation schedule. Switch currency — USD, INR, EUR, GBP, CAD, or AUD. Free online tool.

Mortgage Refinance Calculator →Compare your current mortgage against a new refinance offer. Find monthly savings, break-even point, and total interest saved over the remaining loan life.

Related Terms

AmortisationLoan Amortisation

Frequently Asked Questions

Why do lenders bundle taxes and insurance into my mortgage payment?

It's usually held in an escrow account so the lender can guarantee your property taxes and insurance premiums get paid on time, protecting their collateral. You deposit 1/12th of the annual amount each month along with your principal and interest.

Does PITI include HOA fees?

No, homeowners association fees are separate and not part of the standard PITI acronym, even though lenders often factor them into your total monthly housing cost when qualifying you for a loan.

How do lenders use PITI to decide how much I can borrow?

Most lenders cap PITI at around 28% of your gross monthly income, part of the front-end ratio used in mortgage underwriting. Going above that threshold usually requires compensating factors like a low debt load or a large down payment.

Can I pay taxes and insurance myself instead of through escrow?

Sometimes, especially with a large enough down payment, but many lenders require escrow for loans with less than 20% down. Even when optional, some borrowers prefer escrow simply to avoid managing large annual tax and insurance bills themselves.

Does the PITI amount stay the same every year?

The principal and interest portion stays fixed on a standard fixed-rate mortgage, but property taxes and insurance premiums can rise, which adjusts your total PITI payment even though the loan itself hasn't changed.