Mortgage Basics
4 min read
What Is PITI? The Four Parts of Your Mortgage Payment
Mike Starr
Founder, MortgageWizardTools · M.S. Organizational Management
Last reviewed: August 2026
PITI stands for Principal, Interest, Taxes, and Insurance — the four components that make up a complete monthly mortgage payment. Lenders use your total PITI to determine how much house you can afford.
The Four Components
- •Principal — the portion of your payment that reduces your loan balance
- •Interest — the cost of borrowing, paid to the lender
- •Taxes — property taxes, usually collected by the lender through an escrow account
- •Insurance — homeowners insurance and, if applicable, mortgage insurance (PMI or MIP)
Some borrowers also have HOA fees, which are paid separately but should be factored into total housing cost.
Example Breakdown
On a $400,000 home with 20% down at 6.5%:
| Component | Monthly Amount |
|---|---|
| Principal & Interest | $2,022 |
| Property Tax ($4,800/yr) | $400 |
| Homeowners Insurance ($1,200/yr) | $100 |
| Total PITI | $2,522 |
Why Lenders Care About PITI
Lenders use two ratios:
- •Front-end ratio — PITI should not exceed 28% of gross monthly income
- •Back-end ratio — PITI plus all other debts should not exceed 36% to 43%
If your PITI is too high relative to your income, you will not qualify — even if the principal and interest alone look affordable.
Key Takeaways
- •PITI is the true monthly cost of owning, not just the loan payment
- •Property taxes and insurance can add hundreds per month
- •Lenders evaluate PITI against your income using the 28/36 rule
- •Always budget for full PITI, not just principal and interest