1. What is PITI?

PITI stands for Principal, Interest, Taxes, and Insurance - the four components of a typical mortgage payment. When PMI (Private Mortgage Insurance) is required, it's added to create the complete monthly housing payment.

2. How Does the Calculator Work?

The calculator uses the PITI formula:

Where:

• \( PI \) — Monthly principal and interest payment (USD)
• \( Taxes \) — Annual property taxes (USD)
• \( Insurance \) — Annual homeowner's insurance (USD)
• \( PMI \) — Annual private mortgage insurance (USD)

Explanation: The equation converts annual amounts to monthly by dividing by 12, then sums all components to get the total monthly payment.

3. Importance of PITI Calculation

Details: Calculating PITI helps borrowers understand their true housing costs and ensures they don't overextend themselves financially. Lenders use PITI to determine debt-to-income ratios.

4. Using the Calculator

Tips: Enter all values in USD. Principal + Interest is typically your base mortgage payment. Taxes, insurance, and PMI are annual amounts that will be converted to monthly.

5. Frequently Asked Questions (FAQ)

Q1: When is PMI required?
A: PMI is typically required when the down payment is less than 20% of the home's value.

Q2: How are property taxes determined?
A: Taxes are based on local rates and the assessed value of the property. Your lender can provide estimates.

Q3: What's included in homeowner's insurance?
A: This covers damage to your property from fire, storms, etc., and liability protection.

Q4: Can PMI be removed?
A: Yes, once you reach 20% equity in your home, you can request cancellation of PMI.

Q5: Why calculate PITI before buying?
A: It helps you budget accurately and ensures your total housing payment fits within recommended guidelines (typically ≤28% of gross income).