Use this comprehensive tool to estimate your total monthly mortgage payment, including Principal, Interest, Property Tax, and Home Insurance (PITI).
Mortgage Calculator with Property Tax and Insurance (PITI)
Your Estimated Total Monthly Payment (PITI) is:
Includes Principal, Interest, Tax, and Insurance
Mortgage Calculator with Property Tax and Insurance Formula
The total monthly payment (PITI) is the sum of four components. The Principal & Interest (P&I) component is calculated using the standard annuity formula, while Tax and Insurance are simply divided by 12.
1. Principal & Interest (P&I) Monthly Payment ($M_{pi}$) Formula:
M_pi = P [ r(1 + r)^n / ((1 + r)^n - 1) ]
2. Total Monthly Payment (PITI) Formula:
M_total = M_pi + (Annual Tax / 12) + (Annual Insurance / 12)
Where:
- P = Principal Loan Amount
- r = Monthly Interest Rate (Annual Rate / 1200)
- n = Total Number of Payments (Loan Term in Years * 12)
Variables Explained
- Principal Loan Amount: The total amount of money borrowed from the lender.
- Annual Interest Rate (%): The yearly cost of borrowing money, expressed as a percentage.
- Loan Term (Years): The duration over which the loan is scheduled to be repaid (e.g., 15 or 30 years).
- Annual Property Tax ($): The annual taxes assessed on the property by local government entities. This is divided by 12 for the monthly payment.
- Annual Home Insurance ($): The yearly premium for the homeowner’s insurance policy, also divided by 12 for the monthly payment.
Related Calculators
What is PITI (Principal, Interest, Tax, Insurance)?
PITI is a standard acronym used in the real estate and lending industries to describe the four primary components of a total monthly housing payment. Understanding PITI is crucial for homebuyers, as it represents the true cost of homeownership each month, not just the loan repayment.
The Principal and Interest components go toward paying off the loan itself. The Tax and Insurance components are typically collected by the lender into an escrow account and then paid out to the respective entities (government and insurance company) when they are due. This escrow process ensures that the homeowner doesn’t face large, unexpected bills for property taxes or insurance premiums.
How to Calculate PITI (Example)
- Convert Annual Rate to Monthly Decimal Rate: Divide the annual interest rate (e.g., 6.0%) by 1200. (6 / 1200 = 0.005)
- Calculate Total Payments: Multiply the loan term (e.g., 30 years) by 12. (30 * 12 = 360 payments)
- Calculate P&I Monthly Payment ($M_{pi}$): Use the annuity formula with the Principal Loan Amount, the monthly rate, and the total payments. For a $300,000 loan, this might result in $1,798.65.
- Calculate Monthly Tax/Insurance: Divide the Annual Tax ($4,000) and Annual Insurance ($1,000) by 12. ($4,000 + $1,000) / 12 = $416.67.
- Calculate Total PITI: Sum the P&I Payment and the Monthly Tax/Insurance. ($1,798.65 + $416.67 = $2,215.32).
Frequently Asked Questions (FAQ)
What is the difference between P&I and PITI?
P&I stands for Principal and Interest, which is the amount that goes directly toward repaying your loan. PITI stands for Principal, Interest, Tax, and Insurance, representing the full, actual monthly payment paid to the lender or servicer, which often includes the money put into an escrow account for taxes and insurance.
Are property taxes and insurance always included in the mortgage payment?
No, but they often are. If your loan requires private mortgage insurance (PMI) or if you put less than 20% down, the lender typically requires an escrow account for PITI. If you have significant equity (e.g., over 20% down), you may opt to pay tax and insurance bills separately.
Does this calculator include PMI?
This calculator includes the two main components of the ‘TI’ (Tax and Insurance). It does not explicitly include Private Mortgage Insurance (PMI) or Homeowners Association (HOA) fees, which would be additional monthly costs in many cases.
How often do the monthly payments change?
If you have a fixed-rate mortgage, the Principal and Interest (P&I) portion never changes. However, the Tax and Insurance (TI) portion can change annually, as local governments reassess property values and insurance companies adjust premiums. Thus, your total PITI payment will fluctuate over the life of the loan.