What does PITI stand for in a mortgage payment?

PITI: The four components of a typical monthly mortgage payment: PRINCIPAL (repayment of the loan balance); INTEREST (the cost of borrowing); TAXES (property taxes, often collected in escrow); INSURANCE (homeowner's/hazard insurance, and PMI if applicable, often escrowed); ESCROW ACCOUNT: Lenders often collect taxes and insurance monthly with the payment and pay them when due (impound/escrow account), ensuring these obligations are met; PMI (Private Mortgage Insurance): Required on conventional loans with less than 20% down — protects the lender; can sometimes be added to the payment; QUALIFYING RATIOS: Lenders evaluate the borrower's housing ratio (PITI ÷ gross monthly income, often ≤28%) and total debt ratio (PITI + other debts ÷ income, often ≤36-43%); PITI is the basis for these affordability calculations; understanding PITI and its role in loan qualification is fundamental finance knowledge for brokers and a common national exam topic.