Definition
PITI is an acronym that stands for Principal, Interest, Taxes, and Insurance. These four components make up your total monthly mortgage payment and are used by lenders to assess your ability to repay the loan.
Understanding PITI in Mortgages
When you're calculating monthly mortgage payments, PITI represents the core components of what you'll pay. In simple terms, PITI is the total of your loan's principal and interest, plus property taxes and insurance. Example: If your mortgage principal and interest are $800, taxes are $200, and insurance is $100, then your PITI is $1,100 per month. It's not uncommon to see this amount included in escrow, where the lender manages taxes and insurance payments for you. It's not just about paying the loan; it ensures you're covering all necessary homeowner responsibilities.
