Real Estate Glossary
What is PITI? Definition, Formula & Examples
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Definition
PITI is an acronym for Principal, Interest, Taxes, and Insurance — the four components of a typical monthly mortgage payment on a property with an escrow account. Lenders and investors use PITI as the complete measure of monthly housing cost because it includes both the loan payment itself and the ongoing property holding costs that are typically escrowed. For rental properties, PITI is sometimes extended to PITIA, adding association (HOA) fees.
PITI Example with Real Numbers
On a $280,000 30-year mortgage at 7% interest: Principal + Interest = $1,863. Property taxes = $350/month (escrow). Homeowners insurance = $150/month (escrow). Monthly PITI = $1,863 + $350 + $150 = $2,363. If you have a $200/month HOA fee: PITIA = $2,563. This is the true monthly holding cost used by lenders to calculate your debt-to-income ratio and by investors to calculate DSCR.
Why PITI Matters for Investors
PITI matters because lenders use it (not just P&I) when calculating how much you can borrow. If you see a mortgage payment advertised as "$1,200/month," that's often just P&I — your real monthly payment with taxes and insurance could be $1,600–$1,800. For DSCR analysis, using full PITI gives a more conservative and accurate picture of debt coverage.
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Frequently Asked Questions
Is property tax always included in PITI?
When a lender requires an escrow account (common for loans with less than 20% down or for investment properties), yes. If you waive escrow, you pay property taxes and insurance separately yourself — but they are still part of your true ownership cost.
How is PITI used in qualifying for a mortgage?
Lenders calculate your front-end debt-to-income ratio as PITI divided by gross monthly income. For investment properties, lenders also use PITI to ensure the rental income covers the payment (DSCR analysis).
Does PITI include HOA fees?
Standard PITI does not, but lenders add HOA fees when calculating qualifying ratios. The extended acronym PITIA (Principal, Interest, Taxes, Insurance, Association) reflects this.
How do I estimate the tax and insurance portion of PITI?
Property taxes: check the county assessor website for the assessed value and tax rate. Annual taxes / 12 = monthly escrow. Insurance: get a quote; $100–$200/month is typical for SFR, more for larger properties.
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