Use this comprehensive calculator to estimate your total monthly housing payment, which includes the four critical components of a mortgage: Principal, Interest, Property Taxes, and Homeowners Insurance (PITI). Getting an accurate estimate is the first step to smart home budgeting.
Mortgage and Tax and Insurance Calculator (PITI)
Estimated Monthly PITI Payment:
$0.00Mortgage and Tax and Insurance Calculator Formula
Where:
M = Monthly Principal & Interest Payment
P = Loan Principal Amount
i = Monthly Interest Rate (Annual Rate / 1200)
n = Total Number of Payments (Loan Term in Years * 12)
Total Monthly PITI = M + (Annual Tax / 12) + (Annual Insurance / 12)
Formula Sources:
CFPB – How Mortgage Payments are Calculated
Investopedia – Calculating Monthly Mortgage Payments
Variables Used in the Calculator
- Loan Principal Amount: The total amount you are borrowing, excluding the down payment.
- Annual Interest Rate (%): The annual percentage rate (APR) charged by the lender for the loan.
- Loan Term (Years): The duration over which the loan is scheduled to be repaid (e.g., 15, 30 years).
- Annual Property Tax ($): The estimated total yearly amount paid to the local government based on the home’s value.
- Annual Home Insurance Premium ($): The yearly cost for the mandatory insurance policy covering the dwelling and personal property.
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What is Mortgage and Tax and Insurance Calculator (PITI)?
The Mortgage, Tax, and Insurance Calculator, often referred to by the acronym **PITI**, is the most accurate way to estimate a homeowner’s true monthly housing expense. PITI stands for Principal, Interest, Taxes, and Insurance. Lenders use this precise calculation to determine how much house a borrower can realistically afford, as it covers the four main costs associated with homeownership that are often bundled into a single monthly payment via an escrow account.
**Principal** and **Interest** form the P&I portion of the payment, which is the amount that repays the loan itself and the cost of borrowing the money, respectively. This portion is calculated using the standard amortization formula. The **Taxes** (annual property taxes) and **Insurance** (annual homeowners insurance) components are non-debt costs that are typically collected by the lender each month and held in a separate escrow account to pay the bills when they are due.
Understanding your PITI is crucial for setting a realistic budget. Relying solely on the Principal and Interest payment can lead to underestimating the actual monthly burden by hundreds or even thousands of dollars.
How to Calculate PITI (Step-by-Step Example)
- Determine Loan and Rate Variables: Gather your Loan Principal (P), Annual Rate (R), and Term (N). For example: P = $300,000, R = 6.0% (0.06), N = 30 years (360 months).
- Calculate Monthly Rate (i): Divide the annual rate by 12 (0.06 / 12 = 0.005).
- Calculate Principal & Interest (P&I): Plug the variables into the P&I formula: $300,000 * [ 0.005 * (1 + 0.005)³⁶⁰ / (1 + 0.005)³⁶⁰ – 1 ]$. This results in a monthly P&I of approximately $1,798.65.
- Calculate Monthly Tax (T): Take the Annual Tax and divide by 12. If Annual Tax is $5,000, then $5,000 / 12 = $416.67.
- Calculate Monthly Insurance (I): Take the Annual Insurance and divide by 12. If Annual Insurance is $1,200, then $1,200 / 12 = $100.00.
- Calculate Total PITI: Sum the components: $1,798.65 (P&I) + $416.67 (Tax) + $100.00 (Insurance) = $2,315.32 Total Monthly PITI Payment.
Frequently Asked Questions (FAQ)
Is PITI the only cost of homeownership?
No. While PITI covers the major recurring costs, it typically excludes HOA (Homeowner’s Association) fees, utilities, routine maintenance, and emergency repair costs, all of which should be factored into your total budget.
What is an escrow account and how does it relate to PITI?
An escrow account is a trust account held by your lender (or a third-party agent) to pay your property taxes and homeowners insurance premiums on your behalf. The monthly T&I portion of your PITI payment goes into this account, ensuring those bills are paid on time.
Do I always have to pay the insurance and taxes monthly?
If your down payment is less than 20%, most lenders require an escrow account, meaning you pay T&I monthly as part of your PITI. If you put down 20% or more, you may have the option to pay your taxes and insurance directly once or twice a year, though P&I is always monthly.
How often do property taxes and insurance change?
Property taxes are usually reassessed annually by local government, and insurance premiums can change yearly based on risk factors and market rates. If either amount changes, your lender will adjust your monthly escrow (and thus your total PITI payment) to compensate.