principal, interest, taxes, and insurance (PITI)

Popular Terms
Four components of monthly housing cost that may be combined in a single monthly home mortgage installment. Lenders use PITI in two ways: (1) Before approving the loan: to compute the applicant's back end ratio and front end ratio to judge his or her capacity to payback the loan. (2) After approving the loan: to collect monthly mortgage amount (that covers principal and interest) plus an amount that covers 1/12th of property tax and property insurance premium, and is kept in escrow until due for payment.

Email Print Embed