PITI is an acronym for the four parts of a real monthly mortgage payment: Principal, Interest, Taxes and Insurance. If you only budget for principal and interest, you will under-budget by hundreds of dollars a month.
The portion of your payment that reduces the loan balance. In the early years of a 30-year loan, principal is a small slice; by the end, it is most of the payment.
The cost of borrowing. At 6.5% APR on a $400,000 loan, interest alone is roughly $2,100 in the first month. Interest is front-loaded by design — see the amortization chart on any of our calculators.
Property tax is collected by your county and often escrowed into your payment. It varies widely — from under 1% of home value to over 2.5% in high-tax states like New Jersey. Compare rates on our state pages.
Homeowners insurance protects the property, and if your down payment is under 20%, private mortgage insurance (PMI) protects the lender. PMI typically runs 0.5% to 1% of the loan each year until you reach 20% equity.
Your lender calculates PITI to decide whether you can afford the loan. It is the denominator of the 28% rule. Use our PITI calculator to see the full number, not just the mortgage.
Reading is step one. Step two is running your own numbers — taxes, insurance, PMI and all.
Open the mortgage calculator