Most mortgage calculators lie to you by omission.
They show you principal and interest — the part of your payment that goes to the lender — and stop there. But that number is only about 70% of what you’ll actually pay every month. The rest is taxes, insurance, and possibly PMI and HOA dues. Lenders call the full number PITI, and it’s the number that actually determines whether you can afford a home.
What PITI Stands For
P — Principal
The portion of your payment that reduces your loan balance. In the early years of a 30-year mortgage, this is surprisingly small. On a $350,000 loan at 6.5%, your first payment puts roughly $350 toward the balance. The rest is interest.
I — Interest
The lender’s charge for lending you money. Interest dominates early payments — on that same loan, your first payment includes nearly $1,900 in interest. Over time, as the balance shrinks, more of each payment shifts to principal. This is called amortization.
T — Taxes
Property taxes are collected by your local government and vary dramatically by location. Hawaii averages around 0.3% of home value per year. New Jersey and Illinois top 2%. On a $400,000 home, that difference is $1,000 vs. $8,000 per year — or $83 vs. $667 per month. Most lenders collect property taxes monthly and hold them in escrow, paying the tax bill when it comes due.
I — Insurance
Homeowners insurance protects your home against fire, storms, theft, and liability. Lenders require it. Premiums vary widely by state — Florida averages over $5,000 per year due to hurricane risk, while many Midwest and Mountain states run under $1,500. Like taxes, insurance is usually escrowed and paid monthly.
What Gets Added on Top of PITI
For many buyers, PITI isn’t the whole story:
PMI (Private Mortgage Insurance) is added to conventional loans when you put down less than 20%. It typically costs 0.3–1% of the loan per year and protects the lender — not you — if you default. The good news: PMI cancels automatically once you reach roughly 20% equity.
MIP (Mortgage Insurance Premium) is the FHA version of mortgage insurance. Unlike PMI, if you put down less than 10% on an FHA loan, MIP lasts for the life of the loan. The only exit is refinancing to a conventional loan later.
HOA Dues apply in many condos, townhomes, and planned communities. They’re not technically part of PITI, but lenders count them when qualifying you — and your monthly budget absolutely should too.
Why the Gap Between P&I and PITI Matters
Here’s a real example. A $400,000 home in Tennessee with 10% down at 6.75%:
- Principal & Interest: $2,330/mo
- Property tax (0.64%): $213/mo
- Homeowners insurance: $183/mo
- PMI (0.6%): $180/mo
- Total PITI + PMI: $2,906/mo
That’s a $576/month difference between what most calculators show and what you’ll actually write a check for. Multiply that over a year and it’s nearly $7,000 in surprises.
How to Calculate Your Real PITI
You need four numbers:
- Your loan amount and interest rate → determines P&I
- Your property’s annual tax bill → divide by 12
- Your annual insurance premium → divide by 12
- Your PMI rate if applicable → usually 0.3–1% of loan ÷ 12
Add them together and you have PITI.
The faster way: use our free calculator at piti.com, which pulls real county tax records by address, fills in live weekly rates, and handles FHA and VA math automatically. English and Spanish, no sign-up required.
The Bottom Line
PITI is the honest version of your mortgage payment. Budget on it, qualify on it, and compare homes on it — because that’s exactly what your lender will do.