PITI is the standard shorthand for the components of a monthly mortgage payment used by underwriters and qualification systems.
The four PITI components
- Principal (P) — the portion of the payment that reduces the loan balance
- Interest (I) — the cost of borrowing, calculated on the remaining principal balance
- Taxes (T) — property taxes, typically held in escrow by the lender and paid to the local tax authority on the borrower’s behalf
- Insurance (I) — homeowner’s insurance (hazard insurance), held in escrow by the lender
Common PITI extensions
- PITIA — adds HOA dues for properties subject to a homeowners association
- PITIM or PITIMI — adds Mortgage Insurance (PMI on conventional, MIP on FHA)
- PITIAM — combines all of the above (HOA + MI)
How PITI is calculated
For qualification purposes, the lender calculates the proposed monthly PITI on the new loan and uses that figure in the front-end DTI ratio (PITI ÷ gross monthly income). The full PITI is what the borrower will actually pay each month, even though only P+I goes to mortgage debt service in the traditional sense; the T and I portions go to escrow and are paid out by the lender to the appropriate parties on schedule.
