Payments

PITI (Principal, Interest, Taxes, Insurance)

PITI stands for the four parts of a typical mortgage payment: principal, interest, taxes, and insurance. Principal and interest pay back the loan, while taxes and insurance are often collected in an escrow account and paid for you. Lenders look at your full PITI, not just principal and interest, when they decide what you can afford.

When people quote a mortgage payment, they often mean just principal and interest. But your real monthly cost usually includes property taxes and homeowner’s insurance too, collected through escrow and paid on your behalf. If your loan has mortgage insurance or HOA dues, those stack on top.

PITI matters because it’s the number that has to fit your budget and your debt-to-income ratio. The principal and interest piece is fixed on a fixed-rate loan, but taxes and insurance can drift over time, so your payment can move even when your rate doesn’t.

Related terms

Principal

Principal is the amount you actually borrow, before any interest. Each mortgage payment splits between principal and interest, and early on, most of it goes to interest. As the years pass, more of each payment chips away at the principal, which is how you slowly build equity in your home.

Escrow

Escrow has two meanings in a home purchase. Before closing, it's a neutral account that holds your earnest money and documents. After closing, an escrow account is where your lender collects part of your payment each month to pay property taxes and insurance for you when they come due.

Property Taxes

Property taxes are what your local government charges based on your home's assessed value, and they fund schools, roads, and services. Lenders often collect them monthly in an escrow account and pay the bill for you when it's due. Rates and amounts vary a lot by state and county, so the same priced home can cost very different amounts.

Last updated: June 13, 2026

This definition is educational and isn't an offer to lend or financial advice. Rates, programs, and guidelines may change without notice. All loans are subject to credit and property approval.

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