Mortgage PITI: the four pieces of your real payment
A mortgage quote usually leads with one number — principal and interest — but the payment that actually leaves your account every month has two more pieces bolted on: property tax and homeowners insurance. Skip those and a "$1,770 payment" quietly becomes $2,236.
What PITI stands for
PITI is Principal, Interest, Tax and Insurance — the four line items a lender typically bundles into one monthly payment and holds in escrow. Principal and interest pay down the loan itself; tax and insurance are the homeowner's annual bills, divided by twelve and collected a month at a time so there's no surprise bill in April.
The formula
Principal and interest use the same amortization formula as any fixed loan: P&I = L × r / (1 − (1 + r)^−n), where L is the loan amount (price minus down payment), r is the monthly rate (APR ÷ 12), and n is the number of monthly payments. Add tax and insurance on top: PITI = P&I + (annual tax ÷ 12) + (annual insurance ÷ 12).
A real example
Take a $350,000 house with a $70,000 down payment (20%), a 6.5% APR, a 30-year term, $4,200 a year in property tax and $1,400 a year in insurance.
- Loan amount:
350,000 − 70,000 = $280,000. - Monthly rate:
6.5 ÷ 12 ≈ 0.5417%, or 0.005417 as a decimal. n = 360 payments. - P&I:
280,000 × 0.005417 / (1 − 1.005417^−360) ≈ $1,769.79. - Tax and insurance:
4,200 ÷ 12 = $350.00and1,400 ÷ 12 ≈ $116.67a month. - PITI:
1,769.79 + 350.00 + 116.67 = $2,236.46.
Tax and insurance alone add $466.67 a month — roughly 20.9% of the full payment — on top of the $1,769.79 P&I figure a lender's rate quote usually leads with.
Why that split matters when you compare houses
Two houses with an identical loan amount and rate can carry very different PITI if their tax bills differ, which is common across counties and school districts. A cheaper house with a high tax rate can cost more per month than a pricier one with a low rate — the P&I figure alone won't show that; only PITI will.
What a smaller down payment costs you
Drop the down payment on the same house to 10% ($35,000 instead of $70,000) and the loan grows to $315,000. P&I becomes 315,000 × 0.005417 / (1 − 1.005417^−360) ≈ $1,991.01, and PITI rises to $2,457.68 — about $221 more every month, for the life of the loan, to keep $35,000 in your pocket today. A down payment under 20% also usually adds private mortgage insurance, which isn't part of this figure — see below.
What PITI doesn't include
This is the core escrowed payment, not the whole cost of owning the house. It leaves out PMI, HOA dues and utilities — add those separately for a real monthly budget.
Run your own numbers
The free Mortgage (PITI) calculator runs this instantly for your price, down payment, rate, term and tax/insurance figures, entirely on your device.