What Is PITI? The Four Parts of a Mortgage Payment
Updated November 8, 2026
When people compare homes by the loan payment alone, they often underestimate the real cost by hundreds of dollars a month. Lenders look at a fuller number called PITI, and so should you.
The four parts
Principal
The part of your payment that reduces what you owe. Early in a long loan this is the smaller share, and it grows every month.
Interest
What the lender charges for the loan, based on your current balance. As the balance falls, so does the interest portion.
Taxes
Local property taxes, set by your city, county or school district. They vary a lot by location, so two identical homes can have very different payments.
Insurance
Homeowners insurance protects the home against covered damage. Lenders require it. In some areas you may also need separate flood coverage.
A worked example
For a $400,000 home with 20% down, a 6.5% rate on a 30-year loan, 1.1% property tax and $1,800 a year of insurance:
| Part | Per month |
|---|---|
| Principal & interest | $2,023 |
| Property tax | $367 |
| Insurance | $150 |
| Total PITI | $2,539 |
That is about 25% more than the principal and interest alone.
Costs that are not in PITI
- PMI, if you put down less than 20% on a conventional loan.
- HOA dues, which lenders count when they review your application.
- Maintenance and repairs. A common planning rule is 1% to 2% of the home's value per year.
- Utilities, which are often higher than in a rental.
How escrow works
Most lenders collect taxes and insurance with your monthly payment and hold the money in an escrow account. They pay those bills for you when they are due. It saves you from large lump-sum bills, and it is required on many loans.
Why your payment can go up on a fixed-rate loan
A fixed rate locks in only principal and interest. Property taxes and insurance premiums can change. Your servicer reviews the escrow account each year and adjusts your payment if the bills have changed. If there is a shortage, you may be able to pay it at once or spread it over the next year. Budgeting for some increase in these two lines is sensible, especially in areas where insurance costs have been rising.
How lenders use PITI
Lenders divide PITI by your gross monthly income to get your housing ratio. A traditional target is 28%, although many loan programs allow more. Knowing your full PITI before you shop helps you avoid falling in love with a house that only fits the budget on paper.
Try the free Mortgage Calculator
This article is general information, not financial, tax, legal or insurance advice. Figures are illustrative examples.