What Is PITI (Principal, Interest, Taxes, Insurance)?
PITI = principal + interest + taxes + insurance. It's your full monthly mortgage obligation before operating-expenses like maintenance, vacancy-rate reserves, or utilities. A $280,000 loan at 7% might run $1,860 principal + interest; add $350 taxes and $120 insurance = $2,330 PITI. Lenders cap PITI as a share of your income—typically 28% of gross.
PITI is your total monthly housing payment—principal, interest, property taxes, and homeowner's insurance. It's the number lenders use for the housing-expense-ratio and debt-to-income qualification.
At a Glance
- What it is: Full monthly housing payment (P + I + T + I)
- Why it matters: Lender qualification; cash-flow modeling
- Doesn't include: Maintenance, vacancy, utilities, capex
- Use it for: Housing-expense-ratio; deal-analysis
PITI = Principal + Interest + Property Taxes + Insurance
How It Works
Principal and interest. The core mortgage payment. Amortized over 30 years (or 15). Early years are mostly interest; principal share grows over time. A $250,000 loan at 7% for 30 years = ~$1,663/month P&I.
Taxes. Property taxes. Paid to the county or municipality. Often escrowed—lender collects 1/12 each month and pays the bill when due. Varies wildly: 0.5% to 2.5% of market-value depending on location. A $300,000 home in a 1.5% tax area = $4,500/year = $375/month.
Insurance. Homeowner's insurance. Covers structure, liability, sometimes contents. Lender requires it. Typical range $800–$2,000/year for a single-family. Flood insurance is separate if in a flood zone.
Why PITI matters for investors. Rental-income minus PITI is not cash-flow. You still have operating-expenses, vacancy-loss, and capex. But PITI is the biggest fixed cost—it's the baseline for deal-analysis.
Real-World Example
Jacob in Columbus. He bought a duplex for $295,000 with 5% down. Loan: $280,250. At 6.75%, P&I = $1,818. Property taxes: $4,200/year = $350/month. Insurance: $1,400/year = $117/month. PITI = $2,285. His housing-expense-ratio at $6,500 income: $2,285 ÷ $6,500 = 35%—over the 28% conventional limit. The lender counted 75% of the other unit's $1,350 rent ($1,012) as income. Effective income $7,512. Ratio: 30%. He put 10% down to lower the payment and got to 27%.
Pros & Cons
- Single number for qualification
- Predictable monthly obligation
- Escrow simplifies tax and insurance payments
- Doesn't capture full cost of ownership
- Taxes and insurance can rise
- Investors need to add operating-expenses on top
Watch Out
- Tax reassessment: After purchase, taxes may jump—budget for it
- Insurance gaps: Landlord-insurance differs from owner-occupy; cost can be higher
- Escrow shortfall: If taxes or insurance rise, escrow payment adjusts—expect increases
Ask an Investor
The Takeaway
PITI is your total monthly housing payment. Lenders use it for qualification. For deal-analysis, PITI is the debt piece—subtract it from rental-income along with operating-expenses to get cash-flow.