How to Calculate a Mortgage PITI Payment

You can estimate your monthly principal, interest, taxes and insurance payments yourself to get a good idea of how much a home would cost.

A mortgage PITI payment is a monthly figure that you must pay in order to own your home. PITI stands for principle, interest, taxes and insurance. When you figure the payment, you must use an estimate until you are ready to settle on the home and have an actual insurance policy in place. Each state also has its own policy regarding certain exemptions and partial exemptions to property taxes.

Things You'll Need

• Mortgage calculator or book
• Yearly tax information
• Insurance premium quote

Instructions

1. Figure your principle and interest payment. Use an online mortgage calculator to find out what your monthly principle and interest payment will be. You can find a link to one in the Resources section. You will need to know the mortgage amount that you are taking out and the interest rate you will be charged. Consider the length of the mortgage in months. For example, a 30-year mortgage would be 360 months. Thus, a $100,000 mortgage amount at 7 percent interest for 360 months would yield a monthly principal and interest payment of $665.30.

2. Figure the monthly property tax payment. Most mortgage companies escrow for property taxes, meaning money is collected from you each month and held in an escrow account to cover your annual property tax bill. Determine the taxes for the year and then divide that number by 12. Go to the local tax office and ask if there are any exemptions you may claim and what documentation you need to do so. Let's say your yearly property tax is $2,400. Divide that number by 12. Your monthly property tax payment would be $200.

3. Determine the monthly insurance payment. Divide the yearly policy amount by 12. For example, a $1,200 yearly insurance policy that is divided by 12 would equal $100.

4. Add the monthly principle and interest payment to the monthly payment for the taxes and insurance. The result will be your mortgage PITI payment and the amount you will send the mortgage company each month. Based on the examples used in this article, the monthly PITI payment would be $965.30. To get this number, add the principle and interest ($665.30), the monthly taxes ($200) and the monthly insurance ($100).

Resources

• Bankrate.com: Mortgage Calculator