PITI
The four parts of a typical mortgage payment: Principal, Interest, Taxes and Insurance. Lenders qualify you on the full PITI figure.
What does PITI mean?
PITI is the true monthly cost of owning, not just the loan payment: Principal and Interest repay the mortgage, while Taxes and Insurance are collected into escrow and paid on your behalf. Lenders qualify you on the full PITI figure — and add HOA dues where they apply — so a payment quote that shows only principal and interest understates what you will actually owe each month.
A PITI example
For a $400,000 home bought with 20% down at a 7% rate on a 30-year loan:
| Component | Monthly |
|---|---|
| Principal & interest on $320,000 | $2,129 |
| Property taxes (1% of value a year) | $333 |
| Homeowners insurance ($2,000 a year) | $167 |
| Total PITI | $2,629 |
How lenders use PITI
Lenders qualify you on PITI, not on principal and interest alone. Under the common 28% front-end guideline, the $2,629 payment above implies gross income of about $112,700 a year. Add mortgage insurance and HOA dues where they apply — some lenders call the full figure PITIA.
Taxes and insurance are usually collected through escrow, so they can change even on a fixed-rate loan. A reassessment or a premium increase will raise your monthly payment at the next escrow analysis.
Frequently asked
What does PITI stand for?
Principal, Interest, Taxes and Insurance — the four parts of a typical monthly mortgage payment. Principal and interest repay the loan; taxes and insurance are collected into escrow and paid on your behalf.
Why do lenders qualify you on PITI?
Because it reflects the real monthly cost of owning, not just the loan. Qualifying on principal and interest alone would understate what you owe, so lenders add taxes, insurance and any HOA dues so your debt-to-income ratio matches reality.
Put it to use
Related terms
All glossary terms