Costs
PITI
An acronym for Principal, Interest, Taxes, and Insurance — the four components that make up your total monthly mortgage payment. Lenders use your PITI to calculate your housing expense ratio (front-end ratio). For example, on a $300,000 loan at 6.5% with $400/month in taxes and $150/month in insurance, your PITI would be roughly $2,446/month. Understanding PITI helps you budget accurately for homeownership.
Why It Matters
PITI stands for Principal, Interest, Taxes, and Insurance — the four components of your total monthly housing payment. Lenders use PITI (not just principal and interest) when calculating your debt-to-income ratio because taxes and insurance are mandatory ongoing costs. On a typical $350,000 home: P&I might be $1,800, taxes $320, insurance $150, and PMI $140 — total PITI of $2,410.
Many first-time buyers focus only on the mortgage payment and are shocked by the full PITI amount. Property taxes and insurance can add $400-$800/month or more depending on your state. High-tax states like New Jersey (2.47%) and Illinois (2.07%) can add $600-$700/month in taxes alone on a $350,000 home. Always calculate the full PITI when budgeting.
Real-World Example
PITI on $350,000 home, 10% down, 6.5% rate in Texas: P&I: $1,991. Property tax (1.8%): $525. Insurance: $317. PMI: $184. Total PITI: $3,017. In Ohio on the same home: P&I: $1,991. Tax (1.56%): $455. Insurance: $117. PMI: $184. Total PITI: $2,747. Same house price, $270/month difference — entirely from state costs.
Pro Tip
When house shopping, always calculate the full PITI for properties you're considering. Our mortgage calculator includes all four components automatically.