Glossary
PITIA (principal, interest, taxes, insurance, association dues)
PITIA is principal, interest, taxes, insurance and association (HOA) dues. It is the full monthly payment a DSCR lender divides the rent by.
PITIA is PITI plus HOA or condo dues. For a house with no HOA, PITI and PITIA are the same number.
Condos and townhomes almost always have dues, and some single family homes do too. Ask the listing agent for the current dues, any planned increase and any special assessment before you run the numbers.
How it works
A DSCR lender takes the qualifying rent and divides it by PITIA. Run The Deal does the same: DSCR = qualifying rent / PITIA, where the taxes and insurance include flood insurance if the house needs it.
- Principal and interest
- $1,330.60
- Taxes
- $200.00
- Insurance
- $120.00
- HOA dues
- $75.00
- PITIA
- $1,725.60
- Monthly rent
- $2,000
Without the $75 HOA, the same deal shows a DSCR of 1.21. Small dues can move you into a different pricing tier.
Why it matters
Many DSCR lenders price by ratio tiers. Run The Deal's illustrative tiers break at 1.25 and 1.10, so a $75 HOA can be the difference between two rates. Tiers and cutoffs vary by lender.
Common mistakes
- Using the old owner's tax bill instead of a post-rehab estimate.
- Forgetting special assessments or a planned HOA increase.
- Treating PITIA as your total cost. It leaves out vacancy, repairs, management and capex, which hit cash flow.
Try your numbers in the DSCR calculator.
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