1. What is PITI Payment?

PITI stands for Principal, Interest, Taxes, and Insurance - the four components that make up a typical monthly mortgage payment. Understanding your PITI payment helps you budget accurately for homeownership costs.

2. How Does the Calculator Work?

The calculator uses the PITI formula:

Where:

• \( Principal \) — Monthly loan principal payment
• \( Interest \) — Monthly interest payment
• \( Taxes \) — Annual property tax amount
• \( Insurance \) — Annual homeowners insurance premium

Explanation: The equation combines your monthly mortgage payments with the monthly portions of your annual property taxes and insurance.

3. Importance of PITI Calculation

Details: Calculating PITI helps determine if a home is affordable, as lenders typically require your PITI to be below 28% of your gross monthly income.

4. Using the Calculator

Tips: Enter all values in USD. For principal and interest, use your monthly amounts. For taxes and insurance, use annual amounts which will be converted to monthly.

5. Frequently Asked Questions (FAQ)

Q1: What's included in PITI?
A: PITI includes your mortgage principal, interest, property taxes, and homeowners insurance. It may also include PMI if applicable.

Q2: How does PITI affect loan approval?
A: Lenders use PITI to calculate your debt-to-income ratio. Typically, PITI should be ≤28% of gross monthly income.

Q3: Are HOA fees included in PITI?
A: No, HOA fees are separate from PITI but should be considered in your total housing budget.

Q4: Why divide taxes and insurance by 12?
A: Property taxes and insurance are typically paid annually, but lenders require monthly escrow payments.

Q5: How often should I recalculate PITI?
A: Recalculate whenever property taxes or insurance premiums change, or if you refinance your mortgage.