PITI
PITI stands for Principal, Interest, Taxes, and Insurance—the four components that make up your total monthly mortgage payment. Lenders use your full PITI payment (not just principal and interest) when calculating your debt-to-income ratio. On a $350,000 home, PITI might total $2,800/month even if principal and interest is only $2,100.
Breaking down PITI on a sample $350,000 purchase with 10% down and a 7% rate: Principal and Interest = $2,094/month (on a $315,000 loan, 30-year fixed). Property taxes at 1.2% annually = $350/month. Homeowners insurance at 0.5% annually = $146/month. PMI at 0.7% annually (required with less than 20% down) = $184/month. Total PITI = approximately $2,774/month.
Some lenders add an 'A' for association fees (PITIA), particularly relevant for condominiums. HOA dues are included in qualifying calculations even though they're not paid to the mortgage servicer.
When you hear lenders talk about the 'housing ratio' or 'front-end ratio,' they mean PITI divided by your gross monthly income. Most conventional loan programs cap this at 28–31%. If your gross monthly income is $8,000 and your PITI is $2,000, your front-end ratio is 25%—within typical guidelines.
Key Takeaway
PITI stands for Principal, Interest, Taxes, and Insurance—the four components that make up your total monthly mortgage payment. Lenders use your full PITI payment (not just principal and interest) when calculating your debt-to-income ratio. On a $350,000 home, PITI might total $2,800/month even if principal and interest is only $2,100.
Related Terms
Frequently Asked Questions
Because your actual monthly obligation includes taxes and insurance, not just principal and interest. Using only P&I would understate your housing costs and overstate your affordability.
Your lender collects the taxes and insurance portions of PITI monthly and holds them in an escrow account, then pays your tax bills and insurance premiums on your behalf when they come due.
Sometimes. Conventional loans with 20%+ equity sometimes allow escrow waivers, though lenders may charge a fee (typically 0.25% of the loan). FHA and VA loans generally require escrow.
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