What is PITI

PITI  means principal, interest, property tax and insurance. Basically the payment liability for the subject property. We normally consider the monthly payment.

How to calculate PITI?

Ex.  A home is purchased at $1 million.

Customer put 20% down and get a loan for $800k.  Interest Rate @ 5%, then mortgage monthly payment will be $ 1201.55 (Principal part) + $ 4166.67 (Interest portion)  = $ 5368.22 (total monthly payment).

Property tax in California normally start at 1% base tax rate + special assessment etc. Normally we use 1.25% to estimate. Some area with special school tax is more expensive and might go as high as 1.75%-2.5%.

So 1.25% x 1 million (Here we just use this number for easy calculation. Normally should be taxable value =Land value +improvement value reduce home owner exemption if it’s owner occupied ) = 12500/yr.

Let’s see annual fire insurance is $600. So $50/month.

Monthly PITI = 201.55 (Principal part) + $ 4166.67 (Interest portion) +12500/12 + 600/12