PITI mortgage payment calculator

Principal and interest come from the loan and are fixed for its whole life at a fixed rate: $1,580.17 a month on $250,000 at 6.5 percent over 30 years. Taxes and insurance come from the house and are not fixed at all. They are annual bills, divided by 12, and they move when the assessment or the premium moves.

That split matters when comparing offers. Two lenders quoting the same loan quote the same principal and interest. Any difference in the monthly figure they show you is coming from their estimate of the other two letters, and estimates are not payments. How PITI works walks the same four parts.

A $6,000 tax bill is $500 a month. An $1,800 insurance premium is $150 a month. Both are held in escrow by the servicer and paid out when they fall due, so the monthly figure is a savings instruction rather than a bill.

The most common arithmetic slip on this page is entering a monthly amount in an annual field or the reverse. A $500 monthly tax figure entered as the annual bill drops the PITI by nearly $500 a month, and the result still looks like a mortgage payment. The escrow calculator handles those two lines on their own.

PITI is the payment the servicer collects. Mortgage insurance is a fifth line when the down payment is under 20 percent, and the PMI calculator prices it. Association dues, utilities and maintenance are separate again, paid to other people.

Underwriting uses the PITI figure, plus mortgage insurance and dues, as the housing number inside a debt to income test. So the $2,230.17 here is the figure that gets compared to income, not the $1,580.17.

The four letters answer one question: what leaves the account each month for this house at this loan. Comparing that number to income, using a debt to income view of the budget, is what turns it into an affordability decision. Mortgage affordability runs it from the income side instead. This is educational material, not financial advice.