What is PITI?
PITI stands for principal, interest, taxes, and insurance, the four components that typically make up a monthly mortgage payment.
PITI is an acronym for principal, interest, taxes, and insurance, the core elements of a monthly mortgage payment. Principal reduces the loan balance, interest is the cost of borrowing, taxes are property taxes, and insurance includes homeowners insurance and possibly mortgage insurance. Borrowers encounter PITI when budgeting for a home and during loan qualification. Watch for whether taxes and insurance are escrowed, which increases the monthly payment but simplifies budgeting. PITI does not include homeowners association dues or maintenance. Lenders use PITI to calculate front-end and back-end ratios. Understanding PITI helps avoid surprises in your monthly housing cost.
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