PITI stands for principal, interest, taxes and insurance, the four pieces of a monthly house payment. It's the number lenders hold up against your income, so it decides how much home you qualify for. On most Florida purchases the lender also adds mortgage insurance and any homeowners association (HOA) dues, which makes the housing payment a lender counts PITI plus one or two more lines.
What each letter covers
- Principal is the part of each payment that pays down what you borrowed. It starts small and grows every month as the loan amortizes, meaning the balance is paid off on a fixed schedule.
- Interest is the lender's charge for the money. On a 30-year fixed loan, principal and interest together stay the same for all 360 payments.
- Taxes are county property taxes, split into 12 monthly amounts. Florida bills them once a year, and QualRate's defaults put them at roughly 0.74% to 0.95% of the price.
- Insurance is the homeowners policy, plus flood insurance when the home sits in a flood zone that requires it.
Taxes and insurance usually run through an escrow account, an account your loan servicer holds to pay those bills when they come due, so the check you mail each month covers all four pieces.
How FHA, Conventional, VA and USDA count it
FHA adds the annual mortgage insurance premium and HOA dues to PITI and compares that housing payment with your gross monthly income. An automated approval allows housing up to 46.9% of gross income and total debts up to 56.9%.
Conventional adds private mortgage insurance when you put less than 20% down. Automated approvals focus on total debts, which can reach 50% of gross income, and PITI is the largest piece of that total.
VA has no monthly mortgage insurance, so the housing payment is PITI plus any HOA dues. VA then checks residual income, the money left each month after the house payment, debts and estimated living costs.
USDA adds its 0.35% annual fee and holds housing to 29% of gross income and total debts to 41%.
A PITI example on a $320,000 FHA home
A buyer puts 3.5% down on a $320,000 single-family home. The base loan is $308,800, and the 1.75% upfront premium of $5,404 is financed, for a total loan of $314,204 at a 5.75% rate on a 30-year fixed. Taxes are 0.95% of the price, and insurance is $250 a month.
| Piece | Monthly |
|---|---|
| Principal and interest | $1,833.61 |
| Property taxes ($3,040 a year) | $253.33 |
| Homeowners insurance | $250.00 |
| PITI | $2,336.94 |
| Annual MIP (0.55% of $308,800) | $141.53 |
| Housing payment FHA counts | $2,478.47 |
Divide $2,478.47 by FHA's 46.9% and this buyer needs gross income of about $5,284.58 a month, or $63,415 a year, before any car or card payments. When income lands short of that, a co-signer's income counts alongside yours on FHA, and paying off a car loan frees room under the 56.9% total.
Put your own price, taxes and insurance into the mortgage payment calculator to see your PITI line by line. For the income that payment needs on each loan program, call AAA Capital Funding at 888-601-8344.