1. What is PITI?

PITI is an acronym that stands for Principal, Interest, Taxes, and Insurance. For FHA loans, it also includes Mortgage Insurance Premium (MIP). This represents the total monthly mortgage payment that a borrower will make.

2. How Does the Calculator Work?

The calculator uses the PITI formula:

Where:

• Principal — The amount paid toward the loan balance
• Interest — The cost of borrowing money
• Taxes — Property taxes
• Insurance — Homeowner's insurance
• MIP — Mortgage Insurance Premium (required for FHA loans)

Explanation: This calculation helps borrowers understand their complete monthly mortgage obligation when taking out an FHA loan.

3. Importance of PITI Calculation

Details: Understanding your complete PITI payment is essential for budgeting and ensuring you can afford your mortgage. Lenders typically use a debt-to-income ratio that includes PITI to determine loan eligibility.

4. Using the Calculator

Tips: Enter each component of your mortgage payment in dollars. All values must be non-negative numbers. The calculator will sum all components to give you your total monthly PITI payment.

5. Frequently Asked Questions (FAQ)

Q1: What is MIP and why is it required for FHA loans?
A: MIP (Mortgage Insurance Premium) protects lenders against losses if a borrower defaults on their loan. It's required for all FHA loans regardless of down payment amount.

Q2: How is PITI different from a regular mortgage payment?
A: A basic mortgage payment typically includes only principal and interest. PITI includes the complete payment with taxes, insurance, and for FHA loans, MIP included.

Q3: Are property taxes and insurance included in every mortgage payment?
A: Most lenders require borrowers to pay property taxes and insurance through an escrow account as part of their monthly payment, ensuring these expenses are paid on time.

Q4: Can MIP be removed from an FHA loan?
A: For loans originated after June 3, 2013, MIP lasts for the life of the loan if the down payment was less than 10%. For loans with 10% or more down, MIP can be removed after 11 years.

Q5: What is a good PITI to income ratio?
A: Most lenders prefer your PITI to be no more than 28% of your gross monthly income, and your total debt payments (including PITI) to be no more than 36% of your gross monthly income.