Real Estate Finance

PITI

An acronym for the four components of a typical mortgage payment: Principal, Interest, Taxes, and Insurance.


Definition

PITI represents the total monthly housing payment a lender uses when qualifying borrowers. Principal and Interest cover loan amortization. Taxes refers to the property taxes collected monthly into an escrow (impound) account. Insurance covers homeowner's insurance and any required mortgage insurance. Lenders apply qualifying ratios such as the 28/36 rule: housing (PITI) should not exceed 28% of gross monthly income, and total debt should not exceed 36%.

Exam Tip

P + I + T + I. Used in lender qualifying ratios (28/36 rule). Includes escrowed taxes and insurance — not just principal and interest.

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