How the PITI Calculator works
PITI stands for Principal, Interest, Taxes, and Insurance - the four pieces lenders bundle into the monthly mortgage payment they use to qualify a borrower. This calculator adds up all four so you can see the full monthly cost of owning a home, not just the loan payment.
The formula
Total PITI is the sum of the amortized loan payment and the monthly escrow contributions for tax and insurance:
PITI = P&I + (Annual Property Tax / 12) + (Annual Homeowners Insurance / 12)
The Principal & Interest (P&I) portion uses the standard fixed-rate amortization formula:
M = L x [i(1 + i)n] / [(1 + i)n - 1]
where L is the loan amount (home price minus down payment), i is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (loan term in years times 12). If the interest rate is 0%, the formula reduces to M = L / n.
Worked example
Take a $350,000 home with a $70,000 down payment (20%), financing $280,000 at 6.5% for 30 years. The monthly rate is 0.065 / 12 ≈ 0.005417 and n = 360 payments, which gives a Principal & Interest payment of about $1,770 per month. Add $4,200 in annual property tax ($350/month) and $1,800 in annual homeowners insurance ($150/month), and the total monthly PITI comes to roughly $2,270.
Why taxes and insurance are divided by 12
Property tax bills and homeowners insurance premiums are typically due annually or semi-annually, not monthly. Many lenders collect a share of each with every mortgage payment and hold it in an escrow account, so the full bill is covered when it comes due. Dividing the annual amounts by 12 estimates that monthly escrow contribution - this calculator does not model escrow cushions, shortages, or annual reassessments.
What moves the payment most
- Down payment: a larger down payment shrinks the financed loan amount, which lowers the P&I portion directly - this is usually the biggest lever you control.
- Interest rate: even a half-point change in rate can shift the monthly P&I meaningfully, especially on a 30-year term where the balance stays outstanding longer.
- Loan term: a shorter term (like 15 years instead of 30) raises the monthly P&I but sharply cuts total interest paid over the life of the loan.
- Property tax and insurance: these vary by location and coverage and are added on top of P&I dollar-for-dollar, so a higher local tax rate raises PITI even if the loan terms stay the same.
Interpreting the result
Many lenders use a front-end ratio guideline of roughly 28% of gross monthly income for total PITI (and a back-end ratio around 36% for PITI plus other debts), though actual limits vary by loan program, lender, and credit profile. This calculator only computes the payment amount from the figures you enter - it does not verify affordability, account for PMI, HOA dues, or other loan-specific costs, or replace a lender's formal underwriting.