PITI
Short for principal, interest, taxes and insurance, the four parts of a typical monthly mortgage payment. Lenders use PITI, plus any HOA dues or mortgage insurance, to judge whether you can afford the loan.
Also called: principal interest taxes and insurance, monthly payment
Related terms
The amount you borrowed, or the part of it you still owe. Each payment covers interest first, and the rest pays down principal, which builds equity.
The percentage a lender charges to borrow money, used to figure the interest part of each payment. It does not include fees, which is why the APR is often higher.
A yearly tax set by local governments based on a property's assessed value. Lenders usually collect it monthly through escrow, and rates vary widely by location.
A policy covering the home and belongings against damage such as fire or wind, plus liability. Lenders require it before closing. Standard policies do not cover flood, and often not earthquake.
An account the loan servicer keeps to pay your property taxes and homeowners insurance, funded by part of each monthly payment. It is reviewed yearly, so the payment can rise or fall with tax and insurance bills.
Your monthly debt payments, including the new housing payment, divided by your gross monthly income. Lenders use it to judge whether you can carry the loan; each loan program sets its own limits.