What Is PITI? Understanding Your Full Mortgage Payment

PITI stands for Principal, Interest, Taxes, and Insurance — the four components that make up your total monthly mortgage payment. Understanding each part helps you budget accurately and avoid surprises.

The Four Components of PITI

P — Principal

The portion of your payment that reduces your loan balance. Early in your mortgage, this is a small percentage of your payment. Over time, it grows as the interest portion shrinks.

On a $300,000 loan at 6.5%:

  • Year 1: ~$283/month goes to principal
  • Year 15: ~$805/month goes to principal
  • Year 30: ~$1,872/month goes to principal

I — Interest

The cost you pay to borrow money. This is the lender’s profit. Interest is calculated on your remaining balance, so it decreases as you pay down the loan.

On a $300,000 loan at 6.5%:

  • Year 1: ~$1,613/month goes to interest
  • Year 15: ~$1,091/month goes to interest
  • Year 30: ~$24/month goes to interest

T — Taxes

Property taxes assessed by your local government. Your lender typically collects these monthly as part of your payment and holds them in an escrow account, then pays the tax bill on your behalf.

Property taxes vary widely by location:

  • Low: Hawaii at 0.28% ($70/month on a $300K home)
  • Medium: Florida at 0.86% ($215/month on a $300K home)
  • High: New Jersey at 2.47% ($618/month on a $300K home)

See your state’s tax rate →

I — Insurance

Homeowners insurance protects your home against damage and liability. Like taxes, this is usually collected monthly and held in escrow.

Typical range: $100-$500/month depending on location, home value, and coverage level.

PITI Breakdown Example

$350,000 home in Texas, 20% down, 6.5% rate, 30-year loan:

Component Monthly Cost Annual Cost
Principal + Interest $1,770 $21,240
Property Tax (1.80%) $525 $6,300
Homeowners Insurance $267 $3,200
Total PITI $2,562 $30,740

Without calculating PITI, you might think your mortgage payment is $1,770. The real cost is $2,562 — 45% more than P&I alone.

What About PMI?

If your down payment is less than 20%, there’s a fifth component: Private Mortgage Insurance (PMI). Some people call this “PITIP” but it’s usually just grouped under the PITI umbrella.

Adding PMI to the example above (with 10% down instead):

Component Monthly Cost
Principal + Interest $1,991
Property Tax $525
Homeowners Insurance $267
PMI (0.85%) $223
Total PITI + PMI $3,006

Why PITI Matters

For Budgeting

Many first-time buyers only look at the mortgage payment (P&I) when deciding if they can afford a home. The full PITI is what actually comes out of your bank account each month.

For Qualifying

Lenders use your PITI payment to calculate your front-end debt-to-income ratio. Most lenders require PITI to be under 28% of your gross monthly income.

Gross Income Max PITI (28%)
$60,000/year $1,400/month
$80,000/year $1,867/month
$100,000/year $2,333/month
$120,000/year $2,800/month

For Comparing Homes

Two homes with the same purchase price can have very different PITI payments based on location. A $400,000 home in Texas (high taxes, moderate insurance) has a much higher PITI than a $400,000 home in Hawaii (low taxes, low insurance).

What Is Escrow?

Your lender creates an escrow account to manage the T and I portions of PITI. Each month, 1/12 of your annual tax and insurance bills are collected and held in this account. When the bills come due, your lender pays them on your behalf.

Escrow protects the lender by ensuring taxes and insurance are always paid. Your escrow amount is reviewed annually and adjusted if taxes or insurance rates change.

Calculate Your PITI

Use our mortgage calculator to see your complete PITI payment. Enter your home value, down payment, interest rate, loan term, annual property tax, and insurance to get an accurate monthly payment that includes all four components.

See Payment by Home Price

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