Process
PITI
The four parts of a full mortgage payment: Principal, Interest, Taxes, and Insurance — the number that actually leaves your account each month.
What does PITI mean?
PITI is the real monthly payment, and the reason a lender's quoted principal-and-interest figure understates what you'll pay. It bundles principal and interest with the property taxes and homeowners insurance collected through escrow — and often PMI or HOA dues on top.
In Michigan, the taxes-and-insurance share swings the total by hundreds of dollars depending on the county, which is why two homes at the same price and rate can carry very different PITI.
Lenders size your approval on the full PITI against your income, not just principal and interest.
A Michigan example
Two buyers both purchase $285,000 homes at the same rate, so their principal and interest match. But one home sits in a county near Michigan's 1.38% average tax rate while the other is above 2%.
That tax gap alone can push the higher-tax home's escrow — and its PITI — up by a few hundred dollars a month, even though the loans are identical.
Common questions
What does PITI include?
Principal, Interest, Taxes, and Insurance — the full monthly payment that leaves your account. Lenders often add PMI or HOA dues on top of those four when sizing your approval, so the real number can be higher still.
Why is PITI higher than my quoted payment?
A lender's quoted principal-and-interest leaves out the property taxes and homeowners insurance collected through escrow. In Michigan those can add hundreds of dollars a month, especially in higher-tax counties.
Do lenders qualify me on PITI or just principal and interest?
On the full PITI against your income, not just principal and interest. That's why property tax differences between Michigan counties directly affect how much home you can be approved to buy.
Related terms