What is a PITI Calculator?

The "PITI" acronym

Principal
This is the portion of your monthly payment that goes toward reducing the loan amount (the original amount borrowed). Over time, as you make mortgage payments, the principal balance decreases.

Interest
This represents the interest charges you owe on the outstanding loan balance. It's the cost of borrowing money from the lender.

Taxes
Property taxes are assessed by local governments and are typically paid on an annual or semi-annual basis. To ensure that you have enough funds to cover these taxes when they become due, a portion of the total property tax amount is often included in your monthly mortgage payment. The lender then pays the taxes on your behalf when they are due.

Insurance
Homeowners insurance is typically required by mortgage lenders to protect the property and the lender's investment. Like property taxes, the cost of homeowners insurance is often included in your monthly mortgage payment, and the lender pays the insurance premium on your behalf.

A PITI calculator allows you to input various parameters, such as the loan amount, interest rate, loan term, property taxes, homeowners insurance, and sometimes private mortgage insurance (PMI) if applicable. It then calculates the total monthly mortgage payment that includes all these components (Principal, Interest, Taxes, and Insurance).

This tool is useful for homebuyers and homeowners to estimate their monthly housing expenses accurately and to understand how changes in interest rates, loan terms, property taxes, and insurance costs can affect their overall housing budget. It's an essential tool for financial planning when considering purchasing a home or refinancing an existing mortgage.