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 a homeowner.

2. How Does the Calculator Work?

The calculator uses the PITI formula:

Where:

• \( PMT \) — Monthly principal and interest payment
• \( Taxes \) — Annual property tax amount
• \( Insurance \) — Annual homeowner's insurance premium

Explanation: The equation combines the mortgage payment with prorated monthly amounts for taxes and insurance.

3. Importance of PITI Calculation

Details: Lenders use PITI to determine mortgage affordability, typically requiring it to be less than 28% of gross monthly income for conventional loans.

4. Using the Calculator

Tips: Enter all amounts in USD. For accurate results, use your actual mortgage payment, property tax bill, and insurance premium.

5. Frequently Asked Questions (FAQ)

Q1: What's included in PITI?
A: Principal, interest, property taxes, and homeowner's insurance. Some loans may also include mortgage insurance (PMI).

Q2: How does PITI affect loan approval?
A: Lenders compare PITI to your income (front-end ratio) and total debt payments (back-end ratio) to determine loan eligibility.

Q3: Are HOA fees included in PITI?
A: No, HOA fees are separate but lenders may consider them in your debt-to-income ratio.

Q4: Why divide taxes and insurance by 12?
A: This converts annual amounts to monthly equivalents for the calculation.

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