Principal, Interest, Taxes, Insurance - PITI
The components of a mortgage payment. Principal is the money used to pay down the balance of the loan interest is the charge you pay to the lender for the privilege of borrowing the money taxes refers to the property taxes you pay as a homeowner and insurance refers to both your property insurance and your private mortgage insurance.
Investopedia Commentary
PITI is typically quoted on a monthly basis and compared to a borrower's monthly gross income by means of computing the individual's front-end and back-end ratios, which are used to approve mortgage loans. Generally, mortgage lenders prefer PITI to be equal to, or 28%, of a borrower's gross monthly income.
Related Links
Understanding Your Mortgage
Understanding the Mortgage Payment Structure
Mortgages: How Much Can You Afford?
See also: Back-End Ratio, Front-End Ratio, House Poor, Loan, Mortgage, Mortgage Broker, Private Mortgage Insurance - PMI