Understanding Mortgage Payments: PITI Explained
Break down mortgage payments into Principal, Interest, Taxes, and Insurance (PITI) to understand your true homeownership costs.
Financial Insights
What is PITI?
PITI stands for Principal, Interest, Taxes, and Insurance - the four components that make up your total monthly mortgage payment in the US and Canada.
Breaking Down PITI
- Principal: The amount going toward paying down your loan balance
- Interest: The cost of borrowing money from the lender
- Taxes: Property taxes collected by your lender and paid to local government
- Insurance: Homeowner's insurance and possibly PMI (Private Mortgage Insurance)
How PITI Changes Over Time
In the early years of your mortgage, most of your payment goes toward interest. As time passes, more goes toward principal.
• Year 1: $1,000 principal, $11,000 interest
• Year 15: $7,000 principal, $6,000 interest
• Year 30: $14,000 principal, $0 interest
Additional Costs to Consider
- HOA fees: For condos and planned communities
- Maintenance: 1-2% of home value annually
- Utilities: Higher than renting in many cases
- PMI: Required if down payment is less than 20%
US-Specific Mortgage Types
- Conventional loans: Not government-insured
- FHA loans: Lower down payments (3.5%)
- VA loans: For veterans, 0% down payment
- USDA loans: For rural areas, 0% down payment
Calculate your complete mortgage payment with our mortgage calculator.
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