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Mortgage

Mortgage Payments: Principal, Interest, Taxes & Insurance (PITI)

Disentangle pure mortgage principal and interest from recurring escrow expenses like property taxes and homeowners insurance.

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Mathematical Formula

PITI = PI (Principal & Interest) + PropertyTax + HomeInsurance

  • PI = Monthly principal and interest (amortizing loan payment)
  • T = Monthly property tax escrow (Annual Tax ÷ 12)
  • I = Monthly homeowners insurance premium (Annual Premium ÷ 12)

A monthly mortgage payment typically comprises four key components: Principal, Interest, Taxes, and Insurance (PITI). While principal and interest pay down the loan and service the lender's interest charge, property taxes and insurance are escrow expenses that do not build home equity but are required by lenders and local governments.

Factoring in property taxes and insurance gives you an accurate estimate of total monthly housing costs and helps you determine true home affordability.

Mathematical model verified & deterministicCalculate Mortgage Payment

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