Real Estate Investing Glossary
PITI
Last reviewed 2026-07-15
PITI stands for principal, interest, taxes, and insurance, the four parts of a full monthly mortgage payment.
What is PITI?
PITI is shorthand for the complete monthly cost of a mortgaged property: Principal (the portion that pays down the loan balance), Interest (the lender’s charge), Taxes (property taxes, usually collected monthly into an escrow account), and Insurance (the homeowner’s policy, plus flood or PMI where required).
The distinction matters because a quoted "mortgage payment" often means only principal and interest. On a $200,000 loan at 7% for 30 years, P&I is about $1,331, but with $300 of monthly taxes and $120 of insurance the true PITI is roughly $1,751. Underwriting a rental with P&I alone overstates cash flow by the full tax-and-insurance amount.
Lenders qualify borrowers on PITI (plus HOA dues where applicable) when computing debt-to-income ratios, and most loans with less than 20% down require an escrow account so taxes and insurance are paid with each installment. For investors, PITI plus operating costs and reserves is the number rent actually has to clear.
Formula
PITI = monthly principal + interest + property taxes + insurance
Worked example
On a $180,000 loan at 7% over 30 years, principal and interest come to about $1,198 per month. Adding $270 for property taxes and $110 for insurance gives a full PITI of roughly $1,578, the real monthly obligation the rent must cover.
Frequently asked questions
- Why is my PITI payment higher than the mortgage payment I was quoted?
- Rate quotes and most online calculators show principal and interest only. Property taxes and insurance, typically escrowed and paid monthly with the loan, add hundreds of dollars in most markets. PITI can also rise over time even on a fixed-rate loan, because taxes and insurance premiums get reassessed while only the P&I portion is truly fixed.
- Does PITI include HOA fees or PMI?
- Not by the strict acronym, but in practice lenders count both. PMI (required on most conventional loans above 80% LTV) is folded into the insurance component, and HOA dues are added on top when calculating your debt-to-income ratio. When budgeting a rental, use PITI plus HOA plus operating reserves as the true monthly cost.
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