1. What is PITI?

PITI stands for Principal, Interest, Taxes, and Insurance - the four components of a typical mortgage payment. It represents the total monthly housing expense for homeowners.

2. How Does the Calculator Work?

The calculator uses the PITI formula:

Where:

• \( Principal \) — Monthly principal payment (USD)
• \( Interest \) — Monthly interest payment (USD)
• \( Taxes \) — Annual property taxes (USD)
• \( Insurance \) — Annual homeowner's insurance (USD)

Explanation: The equation combines all monthly housing costs into a single payment amount that lenders use to determine affordability.

3. Importance of PITI Calculation

Details: PITI is crucial for mortgage qualification as lenders typically require it to be no more than 28% of gross monthly income. It helps borrowers understand their true housing costs.

4. Using the Calculator

Tips: Enter monthly principal and interest from your mortgage statement, plus annual property taxes and insurance costs. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: What's included in PITI?
A: PITI includes mortgage principal, interest, property taxes, and homeowner's insurance. It may also include PMI (Private Mortgage Insurance) if applicable.

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

Q3: Are HOA fees included in PITI?
A: No, HOA fees are separate but may be considered in overall debt calculations. Some lenders refer to PITIA (adding Association fees).

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

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