PITI

PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a typical US mortgage monthly payment. Lenders use PITI as the denominator of housing-related affordability ratios (the 28% front-end ratio in the 28/36 rule).

What goes into each component:

• Principal — the portion of the payment that reduces remaining loan balance. Front-loaded smaller; back-loaded larger under standard amortisation.
• Interest — what the lender charges for the privilege of borrowing. Front-loaded larger; shrinks over time as principal declines.
• Taxes — property taxes, typically held in escrow and paid by the lender on your behalf. US rates vary 0.3-2.5% of home value per year by state.
• Insurance — homeowner’s insurance (also typically escrowed). Sometimes includes PMI (Private Mortgage Insurance) if down payment is under 20%, and HOA fees if applicable (though those are technically separate from PITI).

PITI is the number to compare across loan offers — not the headline mortgage payment, which excludes taxes and insurance. Two mortgages with the same headline P+I payment can have very different PITI if the property taxes diverge (Texas vs Colorado, for instance).

Our mortgage calculator breaks the monthly payment into P+I and lets you add tax and insurance separately. For the broader affordability picture, see how much house can I afford?