What Is PITI? How to Calculate Your Monthly Mortgage Payment
Quick Answer
PITI stands for principal, interest, taxes and insurance. These four costs make up a typical monthly mortgage payment. To calculate your PITI, find your principal and interest payment first. Then add one twelfth of your yearly property tax and one twelfth of your yearly homeowners insurance. The Toolnix mortgage calculator gives you the principal and interest part in seconds.
Many buyers focus on the principal and interest figure that a lender quotes first. That number is only part of what you pay each month. Taxes and insurance add hundreds of dollars on top. This guide explains each part of PITI and shows you how to add them. You will see one full example and a table of payments for common loan sizes.
Key Takeaways
- PITI is the full monthly cost of a mortgage before extras like HOA fees.
- Principal and interest stay fixed on a fixed rate loan. Taxes and insurance can change.
- Every $100,000 you borrow adds about $632 a month in principal and interest at 6.5% over 30 years.
What Does PITI Stand For?
PITI is a short way to name the four parts of a mortgage payment. Lenders and real estate agents use the term often.
| Letter | Part | What it is | Who receives it |
|---|---|---|---|
| P | Principal | The amount you borrowed. Each payment reduces it. | Your lender |
| I | Interest | The cost of borrowing the money | Your lender |
| T | Taxes | Your yearly property tax split into monthly parts | Your local government |
| I | Insurance | Your homeowners insurance split into monthly parts | Your insurance company |
Principal and interest go to your lender. Your lender often collects the tax and insurance parts too. It then pays those bills for you.
How Escrow Fits Into PITI
Many lenders collect your taxes and insurance through an escrow account. You pay one twelfth of each yearly bill with every mortgage payment. The lender holds that money. It pays the tax office and the insurer when the bills come due. People often call this extra amount the escrow payment.
Some loans have no escrow account. In that case you pay the tax and insurance bills yourself. You should still count them in your monthly budget.
How to Calculate PITI Step by Step
Take a home that costs $350,000. You put 20% down and borrow the rest. The interest rate is 6.5% on a 30 year fixed loan. The yearly property tax is 1.1% of the home price. The yearly insurance cost is $1,500. These numbers are illustrative. Your own tax bill and insurance quote will differ.
- Find the loan amount. A 20% down payment is $70,000. The loan is $350,000 minus $70,000. That equals $280,000.
- Find the principal and interest payment. The standard mortgage formula gives $1,769.79 per month for this loan. Our guide on how to calculate EMI explains that formula step by step.
- Find the monthly property tax. $350,000 times 1.1% equals $3,850 per year. Divide that by 12 to get $320.83 per month.
- Find the monthly insurance cost. $1,500 divided by 12 equals $125.00 per month.
- Add the four parts together.
| Part | Monthly amount |
|---|---|
| Principal and interest | $1,769.79 |
| Property tax | $320.83 |
| Homeowners insurance | $125.00 |
| Total PITI | $2,215.62 |
Taxes and insurance add $445.83 to this payment. That is about 25% on top of principal and interest.
Use your own figures when you plan. Take the tax rate from your county and a real insurance quote. A different location can change the tax part by a large amount.
Mortgage Payment by Loan Amount
People often search for the payment on a round loan size like $300,000 or $500,000. The table below shows principal and interest only. It uses a 6.5% rate and a 30 year term. Taxes and insurance come on top.
| Loan amount | Monthly principal and interest | Total interest over 30 years |
|---|---|---|
| $200,000 | $1,264.14 | $255,089 |
| $250,000 | $1,580.17 | $318,861 |
| $300,000 | $1,896.20 | $382,633 |
| $350,000 | $2,212.24 | $446,406 |
| $400,000 | $2,528.27 | $510,178 |
| $500,000 | $3,160.34 | $637,722 |
Every $100,000 you borrow adds about $632 a month at this rate and term. You can scale any loan size from that figure.
The interest rate also changes the payment a lot. Here is a $300,000 loan over 30 years at three different rates.
| Interest rate | Monthly principal and interest |
|---|---|
| 5.5% | $1,703.37 |
| 6.5% | $1,896.20 |
| 7.5% | $2,097.64 |
Moving from 5.5% to 7.5% adds $394.27 to the monthly payment. These figures cover principal and interest only.
What PITI Does Not Include
- HOA fees. Homeowners association fees are a separate bill.
- Mortgage insurance. Private mortgage insurance often applies when your down payment is below 20%. Some people call the total PITI plus PMI.
- Utilities and repairs. Your budget needs room for them.
Add these costs to your budget even when your lender leaves them out of your payment.
How Lenders Use PITI
Lenders compare your PITI with your monthly income. This helps them decide how much you can borrow. A lower PITI makes approval easier. A larger down payment or a lower interest rate can bring it down.
Common PITI Mistakes
- Budgeting with principal and interest only. Taxes and insurance add a large share.
- Using a tax rate from another area. Tax rates differ by county and city.
- Forgetting that bills change. Tax and insurance costs can rise from year to year.
- Leaving out HOA fees and PMI. These costs sit outside basic PITI.
- Comparing quotes that count different items. One lender may show principal and interest only while another shows the full payment.
Frequently Asked Questions
PITI stands for principal, interest, taxes and insurance. These are the four parts of a typical monthly mortgage payment.
Add your monthly principal and interest payment to one twelfth of your yearly property tax and one twelfth of your yearly homeowners insurance. For a $280,000 loan at 6.5% over 30 years with $3,850 in yearly tax and $1,500 in yearly insurance the PITI is $2,215.62.
Often yes. Some lenders quote only principal and interest in early estimates. Ask whether the number includes an escrow amount for taxes and insurance.
Basic PITI does not include them. PMI and HOA fees are extra costs. Add them to your budget.
An escrow payment is the monthly amount your lender collects for property tax and homeowners insurance. The lender holds it in an escrow account and pays your bills when they are due.