1. What is PITI?

PITI stands for Principal, Interest, Taxes, and Insurance. It represents the total monthly mortgage payment that a borrower will make. This calculator also includes PMI (Private Mortgage Insurance) in the calculation.

2. How Does the Calculator Work?

The calculator uses the PITI formula:

Where:

• \( Principal \) — The portion of payment that goes toward paying down the loan balance
• \( Interest \) — The cost of borrowing money from the lender
• \( Taxes \) — Property taxes assessed by local government
• \( Insurance \) — Homeowner's insurance premium
• \( PMI \) — Private Mortgage Insurance (if applicable)

Explanation: PITI represents the complete monthly housing payment that lenders consider when qualifying borrowers for a mortgage.

3. Importance of PITI Calculation

Details: Calculating PITI is essential for budgeting and mortgage qualification. Lenders typically use the 28/36 rule, where housing expenses (PITI) should not exceed 28% of gross monthly income, and total debt should not exceed 36% of gross monthly income.

4. Using the Calculator

Tips: Enter all values in dollars. Input the monthly amounts for each component of your mortgage payment. All values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is PMI and when is it required?
A: PMI (Private Mortgage Insurance) is typically required when the down payment is less than 20% of the home's value. It protects the lender in case of default.

Q2: How are property taxes calculated?
A: Property taxes are based on the assessed value of your home and local tax rates. They are usually paid monthly as part of your mortgage payment.

Q3: Can I remove PMI from my payment?
A: Yes, PMI can typically be removed once you reach 20% equity in your home, either through payments or appreciation.

Q4: Are HOA fees included in PITI?
A: No, HOA fees are not typically included in PITI calculations but should be considered in your overall housing budget.

Q5: How does PITI affect mortgage qualification?
A: Lenders use PITI to calculate your debt-to-income ratio, which is a key factor in determining how much mortgage you can afford.