What is PITI?
The portion that reduces your loan balance each month
Cost of borrowing — higher early in the loan term
1/12 of annual property tax, held in escrow
1/12 of homeowners insurance + PMI if applicable
PITI Formula
where r = monthly rate, n = total payments
T = Annual property tax ÷ 12
I = Annual insurance ÷ 12
PMI = Loan × PMI rate ÷ 12 (if down payment < 20%)
PITI = P&I + T + I + PMI
PITI Example: $400,000 Home
| Component | Annual | Monthly |
|---|---|---|
| Principal & Interest (6.5%, 30yr, 20% down) | $24,300 | $2,025 |
| Property Tax (1.1% avg) | $4,400 | $367 |
| Homeowners Insurance | $1,800 | $150 |
| Total PITI | $30,500 | $2,542/mo |
PITI Debt-to-Income Ratio
Lenders use your PITI to calculate your housing DTI ratio: PITI ÷ gross monthly income. Guidelines:
- Conventional: Max 28% housing DTI, 36% total DTI
- FHA: Max 31% housing DTI, 43% total DTI
- VA: No official max but 41% total DTI preferred
On $8,000/month gross income: $2,542 PITI = 31.8% housing DTI (above conventional, borderline FHA).
Frequently Asked Questions
What does PITI stand for?
PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a complete monthly mortgage payment.
How do I calculate PITI?
Add your monthly principal & interest payment (from an amortization formula) to 1/12 of your annual property tax, 1/12 of your homeowners insurance, and 1/12 of annual PMI if applicable.
Why do lenders use PITI instead of just P&I?
PITI reflects your true monthly housing cost. Lenders need the full number to assess whether you can afford the home and to set up your escrow account accurately.
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