CalculateUnderstanding Your Mortgage Payment: PITI Explained
Principal, interest, taxes, and insurance — the four pieces that make up a typical mortgage payment, and what's not included that still costs you money.
What PITI stands for, and what each letter actually pays for
PITI is a standard way of describing a mortgage payment as four parts. Principal is the portion that reduces the amount you originally borrowed. Interest is the cost of borrowing that amount, charged on the remaining balance. Taxes are your property taxes, typically collected monthly and held in an escrow account until the bill comes due. Insurance is your homeowner's (hazard) insurance premium, usually escrowed the same way. As the Consumer Financial Protection Bureau puts it, amounts covering taxes and insurance "go into an escrow account… to cover your property tax and homeowner's insurance payments as they come due," so you're not stuck finding a large lump sum once or twice a year.
How the principal-and-interest part is actually calculated
A standard fixed-rate mortgage uses an amortization formula: each payment stays the same for the life of the loan, but the mix between principal and interest shifts every month. Early on, interest makes up the bulk of the payment because it's calculated on a large remaining balance; as the balance shrinks, more of each payment goes toward principal instead. This is why paying even a little extra toward principal earlier in a loan has an outsized effect on total interest paid — you're reducing the balance interest gets charged on for every remaining month of the loan.
PMI: when you're paying it, and when it has to stop
Private mortgage insurance is typically required on a conventional loan when your down payment is below 20% of the purchase price — it protects the lender, not you, against default. Under the Homeowners Protection Act, there are two ways it comes off: you can request cancellation in writing once your balance reaches 80% of the home's original value (assuming your payments are current and there's no second lien), or your servicer must automatically terminate it once the balance is scheduled to hit 78% of the original value, with no request needed. Either way, it has a hard stop — it isn't meant to run for the life of the loan.
How much house can you actually afford? The 28/36 rule
A widely used lending guideline caps housing costs (your full PITI) at 28% of gross monthly income, and total debt payments — housing plus car loans, student loans, credit cards, and so on — at 36%. These aren't CFPB regulatory limits; they're an industry rule of thumb that shows up across mortgage lenders and calculators, and actual qualifying ratios vary by lender and loan program. Treat 28/36 as a sanity check on affordability, not a guarantee of approval at that level.
Rates move weekly — check the current number, not last year's
Mortgage rates aren't fixed across the market; they shift week to week with broader interest-rate conditions. As of mid-August 2026, Freddie Mac's Primary Mortgage Market Survey put the average 30-year fixed rate at 6.67% and the 15-year fixed at 5.96% — both figures Freddie Mac updates weekly at freddiemac.com/pmms. Whatever rate you use in a calculator or a conversation with a lender, it's worth checking that page for the current figure rather than relying on a number that might already be a few months stale.
Frequently asked questions
Is PITI the same thing as my total monthly housing cost?+
Usually close, but not always identical — PITI doesn't include PMI or HOA dues, which are common additional costs on top of it if they apply to your loan or property.
Can I get PMI removed before the automatic 78% cutoff?+
Yes — you can request cancellation in writing once your balance reaches 80% of the home's original value, as long as your payment history is current and there's no second lien on the property. Some lenders may require an appraisal to confirm value hasn't dropped.
Do property taxes ever go down?+
They can, though it's less common than increases — reassessments, successful appeals, or local rate changes can all move a tax bill in either direction, which is one reason escrow payments are periodically recalculated.
What's the difference between PITI and DTI?+
PITI is a dollar amount — your monthly housing payment. DTI (debt-to-income ratio) is a percentage comparing your total monthly debt payments, including PITI, to your gross monthly income. Lenders look at both.
Sources
Disclaimer: This guide is for general educational purposes and does not constitute financial, tax, legal or medical advice. Rules, rates and thresholds change over time — confirm current figures with the official sources linked above or a qualified professional before making a decision.