PITI
Updated
What is piti?
PITI stands for principal, interest, taxes and insurance, the four components of a typical escrowed mortgage payment. It is the amount that leaves your bank account each month.
How it is calculated
PITI = principal + interest + (annual property tax ÷ 12) + (annual insurance ÷ 12)
PITI questions
- What does PITI stand for?
- Principal, interest, taxes and insurance: the four parts of a full monthly housing payment. Mortgage insurance and HOA dues are often carried alongside it.
- What is the difference between P&I and PITI?
- P&I is principal and interest alone: the part that retires the loan. PITI adds property tax and homeowner's insurance, and together they are what leaves your account each month if you escrow.
- Why is my payment higher than the P&I figure I was quoted?
- Because the quote covered the loan and not the property. Taxes, insurance, any mortgage insurance and HOA dues are real monthly money and routinely add a third or more to a P&I figure.
What it means in practice
Lenders underwrite against PITI, not against principal and interest, because taxes and insurance are obligations that come with the property whether or not they are escrowed.
PITI as normally quoted excludes HOA dues, even though lenders include those dues in qualifying ratios. This calculator shows HOA dues as a separate line so nothing is hidden.
Property taxes and insurance vary dramatically by location. Two identical homes with identical loans can differ by hundreds of dollars a month in PITI.