PITI
PITI stands for principal, interest, taxes, and insurance, the four parts that make up a typical monthly mortgage payment. Lenders use the full PITI figure, not just principal and interest, to judge what you can afford.
PITI is the standard way lenders describe a housing payment because it captures every recurring cost the loan carries, not only the loan itself. The four parts are:
- Principal: the portion that pays down the amount you borrowed.
- Interest: the cost of borrowing, charged on the remaining balance.
- Taxes: property taxes, usually collected monthly into an escrow account and paid on your behalf.
- Insurance: homeowners insurance, plus private mortgage insurance (PMI) when your down payment is under 20 percent.
When an affordability rule talks about your payment being a share of income, it almost always means PITI, sometimes with HOA dues added. That is why two loans with the same principal and interest can still be very different to carry once taxes and insurance are included.
Used in these calculators
Guides that put this term to work
Related terms: Principal , Private Mortgage Insurance (PMI) , Amortization
Source: Consumer Financial Protection Bureau, Owning a home
Last updated . Part of the FinExplained finance glossary .