Principal, Interest, Taxes, Insurance (PITI)

Principal, Interest, Taxes, Insurance (PITI)

What is PITI?

PITI, which stands for Principal, Interest, Taxes, Insurance, are the components of the mortgage payment payable monthly:

  • Principal is the loan amount money. If you borrowed $36,000 over 30 years, your monthly "Principal" payment would be $100. (36000/12 months/30 years)
  • Interest is the rate on top of the principal. Since 2018, interest on qualified mortgage loans is deductible up to $750,000.
  • Taxes are any taxes local, city, and state governments charge on your property. This is paid alongside monthly mortgage payments. Local property taxes are tax deductible.
  • Insurance is any insurance premium required by the lender. This includes Private Mortgage Insurance (PMI) and Homeowners insurance.

Typically, PITI should not be more than 28% of a borrower's monthly gross income.

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