The four components of a full monthly mortgage payment.
PITI stands for the four components of a full monthly mortgage payment: Principal (debt reduction), Interest (cost of borrowing), Taxes (property taxes escrowed monthly), and Insurance (hazard insurance escrowed monthly). PITI is the number lenders use for DTI calculation and the number borrowers actually owe each month.
Many first-time borrowers calculate "what they can afford" using just principal and interest — and end up shocked at closing when the actual monthly payment is 20–35% higher than their P&I number. That's PITI. Property taxes can add $300–800/month even on modest homes; hazard insurance adds another $100–250/month. Together they often equal 25–30% of P&I.
On most conventional and FHA loans, taxes and insurance are escrowed — the lender collects them monthly along with P&I, holds the money in an escrow account, and pays the tax bill and insurance premium when due. Escrow simplifies bill-paying for the borrower but also gives the lender control over making sure the bills actually get paid (a tax lien or canceled insurance is a major loan default risk).
Some loans go a step further to PITIA, which adds HOA / Association dues as a fifth component. On condos and properties with HOAs, dues can be $200–800/month and are part of what the borrower owes — they're included in DTI calculation even if they don't flow through the lender's escrow.
For investment property buyers, PITI matters because it's the number lenders compare against rental income to calculate DSCR. A property with $1,800/month gross rent and $1,600/month PITI has a 1.13 DSCR (using PITIA in the denominator). Most DSCR lenders use PITIA, not just P&I, when sizing loans — which is why escrowed taxes and insurance affect the loan amount you qualify for.
| Loan amount (80% LTV) | $320,000 |
| Rate / amortization | 7.25% / 30-year fixed |
| Principal & Interest | $2,183 |
| Annual property taxes (~1.8% of value) | $7,200 |
| Monthly tax escrow | $600 |
| Annual hazard insurance | $1,500 |
| Monthly insurance escrow | $125 |
| Total monthly PITI | $2,908 |
| PITI as % of P&I | 133% |
Principal, Interest, Taxes, Insurance — the four components of a full monthly mortgage payment.
PITIA adds HOA / Association dues as a fifth component. On condos and properties with HOA fees, PITIA is the more complete monthly obligation.
On most conventional and government loans, yes — the lender collects T&I monthly and pays the bills when due. On some non-QM and asset-based loans, the borrower pays taxes and insurance directly.
On DSCR loans, most lenders use PITIA in the denominator — so DSCR = NOI ÷ Annual PITIA. Higher taxes or insurance reduces DSCR and can reduce the loan amount you qualify for.
Usually property taxes — even modest homes in high-tax states can have $400–800/month tax bills that surprise borrowers focused on P&I.
Matrix sizes DSCR loans using realistic PITIA — taxes, insurance, and HOA included — so the loan you qualify for actually cash-flows.
