PITI.
In plain English
PITI stands for principal, interest, taxes, and insurance, the four parts that usually make up one monthly mortgage payment. Principal pays down what you borrowed, interest is the lender's charge for the loan, taxes are your property taxes, and insurance is your homeowners insurance (plus mortgage insurance if you have it). Lenders collect the tax and insurance portions in an escrow account and pay those bills for you when they come due. When a lender asks what you can afford, they are usually thinking about your full PITI, not just principal and interest.
01Why it matters
Quoting yourself only principal and interest makes a house look cheaper than it is; taxes and insurance can add hundreds of dollars to the real monthly cost.
02The math, step by step
Say principal and interest run $1,400 a month. Add $300 for property taxes and $120 for homeowners insurance, and your real PITI payment is $1,820. That extra $420 is the part people forget when they budget.
03What this is NOT
PITI is not just your loan payment. It also bundles in property taxes and insurance, which is why your actual monthly bill is higher than the number a quick mortgage calculator shows.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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