Glossary
PITI (principal, interest, taxes, insurance)
PITI is the full monthly house payment: principal, interest, property taxes and homeowners insurance. Add HOA dues and you get PITIA.
Lenders and investors use PITI because principal and interest alone understate what a house really costs to own each month. Taxes and insurance are often collected in escrow with the loan payment.
For investors, PITI is the starting point for both lender ratios and cash flow.
How to calculate it
- Find the monthly principal and interest from the loan amount, rate and term.
- Divide the yearly property tax bill by 12.
- Divide the yearly insurance premium by 12. Include flood insurance if the house needs it.
- Add them up.
- Loan
- $200,000 at 7%, 30 years
- Principal and interest
- $1,330.60
- Taxes ($2,400 a year / 12)
- $200.00
- Insurance ($1,440 a year / 12)
- $120.00
Rate and terms are illustrative only. They vary by lender and borrower.
PITI vs PITIA
If the property has HOA or condo dues, add them to get PITIA. DSCR lenders divide rent by PITIA, so leaving the HOA out makes your DSCR look better than it is.
What to watch
- Taxes after rehab. Many localities reassess after a sale or big renovation. Run The Deal estimates taxes on the post-rehab value, not the old bill.
- Insurance on rentals. A landlord policy usually costs more than an owner policy. Get a real quote.
- Flood insurance. A high-risk flood zone can add a large monthly cost.
The rental property calculator builds PITI for you from the address and loan terms.
Keep going
Free tools
Glossary
Run your next deal before you write the offer.
Run The Deal is in an invite-only beta. Ask for a spot and we will email you when it opens.