PITI - Principal, Interest, Taxes, and Insurance - the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowners and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.

Principal is the amount borrowed against the home. It is the amount that will be reflected in the mortgage Lien as well. As a fully amortized mortgage matures, the Principal balance grows smaller.

PITI is typically quoted on a monthly basis and compared to a borrower's monthly gross income by means of computing the individual's front-end and back-end ratios, which are used to approve mortgage loans. Generally, lenders prefer the PITI to be equal to, or 28%, of a borrower's gross monthly income.

Always remember on a purchase to ask what the tax and insurance figures will be so that you are not suprised when the debt to income ratios are calculated by your lender.

Just because the total PITI amount is used to qualify you for your loan and the amount is expressed in several areas on your loan application, it does not necessarily mean that your payment will include impounds for taxes and insurance. You must request your loan officer to include impounds in your loan although some loan programs may require them.

PITI is the combined monthly housing expenses. Although it only stands for principle, interest, taxes, and insurance, it will also include any Homeowners Association dues that you must pay.

The interest portion of PITI is paid in arrears. In other words, the interest amount has been earned by the bank in the prior month. The principal portion is paid to reduce the balance. With a lower loan balance, a lesser amount of interest is charged in the following month, and a bigger portion goes towards paying down the principal. This is the basic principle of "amortization", paying the same amount (assuming the interest rate never changes during the loan term) periodically to pay off the mortgage at the end of the loan term.

What is PITI - Your mortgage payment is made up of four components these include the following Principal, Interest, Taxes and Insurance. Some lenders require 2-3 months PITI reserves in order for your loan to be qualified.

For your mortgage broker to accurately quote your PITI payment you will need to supply them with an accurate property tax amount and home owners insurance premium cost. Without these exact numbers your mortgage broker has to speculate your tax and insurance amount based on local averages.

PITI (Principal, Interest, Taxes, and Insurance) is the abbreviation used to describe all the components of a mortgage payment. When you are quoted a payment when applying for a loan make sure it is not just the "PI" which is just principal and interest because then you will need to add on the monthly tax and insurance to get a true monthly cost.

Some borrowers may not wish to have their payment include PITI. When shopping a mortgage loan, it is advised that the borrower maintain a sound understanding of the monthly costs of taxes and insurance(The TI portion), and look only at the principal and interest (The PI portion) of the payment. This will avoid confusion between you and your loan officer or mortgage broker with respect to what you are actually paying on a monthly basis for your mortgage (PI)- which is really the only part of the PITI a loan professional is affecting.

When lenders require PITI reserves they may have seasoning requirements. This means the funds need to have been in place for a certain period of time such as 30 or 60 days. If they allow sourced funds, this means that the funds can come from anywhere and be deposited before close into a checking or savings account with no seasoning time required.

Although each lender's requirements on PITI reserves will vary, by their individual programs, some will allow the proceeds from a Cash Out Refinance to cover the PITI Reserve requirements.

Be very careful when comparing monthly mortgage payments. Ask to see the payments in writing from each mortgage professional that provides you a quote. This way you can compare PITI (Principal, Interest, Taxes, and Insurance) payments with everything right in front of you so that there is no confusion. Sometimes, one lender may quote you a payment and even have a homeowners association (if applicable) due worked into your monthly PITI payment and another lender may not. This is why you should always request for the payment quote in writing and request it be broken down so that you can see what your monthly payment will consist of to make sure you are comparing "apples to apples".

PITI is the payment your debt ratio is calculated off of.

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