Principal, Interest, Taxes, Insurance - PITI

What Does Principal, Interest, Taxes, Insurance - PITI Mean?
The components of a mortgage payment. Principal is the money used to pay down the balance of the loan; interest is the charge you pay to the lender for the privilege of borrowing the money; taxes refer to the property taxes you pay as a homeowner and insurance refers to both your property insurance and your private mortgage insurance.

Investopedia explains Principal, Interest, Taxes, Insurance - PITI
PITI is typically quoted on a monthly basis and compared to a borrower's monthly gross income by means of computing the individual's front-end and back-end ratios, which are used to approve mortgage loans. Generally, mortgage lenders prefer PITI to be equal to, or less than 28%, of a borrower's gross monthly income.

Filed Under: Insurance, Real Estate

Related Terms

Back-End Ratio
Front-End Ratio
House Poor
Loan
Mortgage
Mortgage Broker
Private Mortgage Insurance - PMI
Total Housing Expense
More Related Terms

Related Links

Mortgage Basics: Loan Eligibility - So you qualified for a big mortgage loan, but should you take it? Find out how to determine how much you can really afford.
Understanding the Mortgage Payment Structure - We explain the calculation and payment process as well as the amortization schedule of home loans.
Find The Best Mortgage Rates - Search and compare the best fixed and adjustable mortgage rates in your area with Bankrate.com. Click Here!
Mortgages: How Much Can You Afford? - Answering this means number-crunching as well as factoring in other considerations and expenses.
Should I pay off my mortgage before I retire?
The Hidden Costs Of Home Ownership - Mortgage lenders don't factor the extra costs into your loan amount. Make sure you save for the "little" things.

Rate this Term: Your Rating: Overall Rating: Vote Now!