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What Is PITI? Principal, Interest, Taxes, Insurance

The four components that make up your monthly mortgage payments are Principal, Interest, Taxes, and Insurance, called PITI ('pity'). These are the figures that the lender calculates into the Debt-to-Income ratio, to find out how much you can afford.

PITI - Principal

The principal is the total balance of your mortgage loan. This is the portion of your payment that goes toward paying down the balance.

PITI - Interest

Interest is the portion of your payment that goes to your lender for borrowing the money. The interest is based off of the outstanding principal balance on the loan.

PITI - Taxes

Taxes are the portion of your payment that goes toward property taxes. Borrowers usually choose to pay these taxes in their monthly payments, as part of the PITI. This is a service provided by the lender.

PITI - Insurance

Insurance is the portion of your payment that goes toward homeowners insurance, private mortgage insurance (if applicable) and flood insurance (if applicable). There are additional types of insurance, such as earthquake insurance, that are far less common than the ones mentioned previously. These payments can be rolled into your monthly mortgage payments, just as the lender can do with the taxes.

Call a Total Mortgage expert now at 877-868-2503 to find out how we can customize a mortgage loan with some of the lowest current mortgage rates for you.

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