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PITI Mortgage Calculator

Find the monthly PITI mortgage payment of a fixed rate mortgage with this PITI Mortgage Calculator.

What is a PITI Calculator? And How to Use it

PITI calculators will help you to evaluate the total monthly cost of your mortgage which is crucial when are you trying to determine your monthly budget. You also need to use a PITI calculator before you take out a mortgage because you should know your exact monthly payments before signing any paperwork.

This will ensure you have enough money to borrow the new house or to buy it. Knowing how to use the PITI calculator matters because you need to always know how much money is coming out of your pocket every month when it comes to housing.

PITI also matters because it helps you calculate your debt-to-income ratio. This can help you know the exact amount of money you can borrow without being over your limits. Knowing your debt-to-income ratio also allows you to know what mortgage you might be approved for as many lenders will look at this factor before deciding to let you borrow money or not. Most lenders want your ratio to be 28% or less. The exact amount will depend on your region though and your credit score as well.

How Do I Calculate PITI?

You will need to have a few things to get started before you can use the PITI calculator. Make sure you know your annual tax amount, insurance cost, interest rate, and principal loan amount.

There is a common formula for calculating PITI that the calculator will use for you:

PITI= monthly tax + monthly insurance + monthly mortgage payment

The monthly tax will be your annual tax amount and then you divide it by 12. Monthly insurance is your annual insurance cost also divided by 12. You should know your monthly mortgage payment and the principal loan amount based on the loan documents you received. If you aren’t sure what they are, you can always ask your loan service provider or use a mortgage payment calculator.

If you don’t already have a loan, you can enter in the numbers you think you can afford or the numbers you are trying to get when you go loan shopping. This will give you a quick idea of how much you can afford and if the numbers you have in your head are correct or not.

Here is a quick example of the calculator and some numbers:

Let’s say you need $4,800 a year to cover the property tax and your insurance costs you $1200 a year. Your expected monthly tax will be $4,800/12 which gives you $400. You will also divide $1200 by 12 and get $100.

Your mortgage might be $200,000 for 30 years with a 7% interest rate. This will give you a monthly payment of $1,330.60. You will then need to add all these together to get the final cost of the PITI.

$400+ $100 + $1,330.60 gives you a total of $1,730.60. These are just basic figures and your final amount might be more or less depending on your insurance costs and how much of a loan you take out as some houses will always need bigger mortgages than others.

We mentioned above also being able to use a mortgage calculator in case you aren’t sure what your monthly payment is. Here is some more information on that and what to do when trying to figure out your monthly payment.

How Does the Mortgage Calculator Work?

The mortgage calculator will do all the hard work for you by using a formula to create your mortgage payment. You will need to know your mortgage payment before being able to use the PITI. So, before using the PITI, make sure you can create your mortgage payment with the calculator or you can use the formula on your own.

The mortgage payment calculator looks like this:

M= P [i(1+i^n]/[(1=i)^n-1]

To use the formula, make sure you know what the variables mean:
● M= monthly mortgage payment
● P= principal amount of the loan
● i= the monthly interest rate
● n= the number of payments over the life of the loan

If you need help calculating the interest, you will need to divide your rate by 12. Make sure to convert the percentage, so if your rate is 6%, you will do 0.06/12.

The number of payments over the life of the loan can also be tricky if you’ve never done it before. If your loan is 30 years, you can to 30 multiplied 12 to give you 360 payments over the lifetime of the loan.

How Do the Calculators Help Me?

It’s always important to know your financial situation and how much you can afford to pay or not pay before taking out a mortgage. Just because a lender approves you for an offer doesn’t always mean you should take it. You will need to make sure you know exactly what your monthly payment is so you know if you can afford it or not.

Keep in mind your housing is often your biggest cost of living, so you need to make sure you can afford it without it being a huge burden every month. Some people make the mistake of taking out a mortgage that is too big and they find themselves overwhelmed every month when the bills come in.

Using the PITI calculator and the mortgage calculator can help you estimate your mortgage payment when you buy a home or when you are refinancing the home you already live in.

How to use the PITI Mortgage Calculator?

To use the calculator, you insert the principal amount for the loan. Usually, this is the purchase price of the house. Then, the annual interest rate for the loan that the bank is offering. You can use estimates for your annual property tax costs and an estimate for the homeowners insurance. Then, you enter the total months of the loan. As an example, a 30 year loan would have 360 months.

PITI Cash Reserves

Another PITI aspect that helps protect the lender is cash reserves. This is a requirement that the lender puts on the borrower. They may require something like 6 month, or 12 month, cash reserves. So, after closing costs and all other purchase expenses, the borrower has to show an account, or enough liquid assets, to cover the PITI payment for that 6 month, or 12 month, requirement.

What is this Mortgage Escrow Payment?

The lender holds funds in an escrow account to pay for the taxes, insurance, or any other cost that you're having the lender take care of on behalf of your home costs. They'll make your insurance payment, or tax payment, for you out of these escrow funds. This is part of your PITI payment. Now, remember, that your taxes and insurance can change, from year-to-year. So, your PITI payment can change even if you have a fixed rate mortgage.

What Costs Come with Buying a Home?

When using the PITI calculator, it’s important to understand the costs that are involved with the calculator, so you know what each of them means and why they are included in the costs of the calculator.

The first is the principal amount. This is the amount you borrow. Each time you make a mortgage payment, this cost will drop you begin to make a dent in the cost of the house. Your interest rate is the extra rate the lender charges you for borrowing the money. Any time you borrow money, you will be charged interest because the lender has to make some extra money while you are paying their money back.

Property taxes are also included in the PITI calculation. Each month you have to pay a portion of the property tax, which is why the calculator divides it by 12. So, each month you are paying 1/12 of the amount.

Your loan provider will save your tax payments into an escrow fund and then they will pay them when they are due.

Mortgage insurance is also included in the PITI. You might only have mortgage insurance if your down payment is less than 20%. The amount you pay will depend on your loan provider and the total amount you have financed.

Oftentimes, the insurance will be canceled once you have paid back at least 20% of the loan. If you have an FHA loan though it might still go after the 20% is paid.

You also need to factor in the price of homeowners insurance even though it’s not included in the PITI calculator. Homeowners insurance is often required when you have a mortgage because you have to show you have protection in case there is a fire, storm, theft, or a tree falling onto your house.

The same with property taxes go for homeowners’ insurance meaning you will pay 1/12 of the premium each month. If you have damage to your house, the servicer of your insurance will pay for the damage to your house. You might have a deductible you need to meet though before they pay for damage to the house.

What If I Can’t Afford What the PITI Shows?

If you are using the PITI to try and see what mortgage payment you can afford, you might be surprised to see what you can’t afford as much you thought. This is one of the best things about the PITI calculator because it shows you the total cost of what you are paying rather than just the mortgage payment amount.

If you see that the number is too high for you, you might need to see if you can find a better loan provider or if you get a better interest rate. This might not be able to happen until you raise your credit score or lower your debt-to-income ratio. Consider working on these two things for a few months to see if you can make a difference and then try to apply for a better loan.

Final Thoughts

Always use the PITI calculator so you can make sure you know how much you are paying every month as it will be higher than just your monthly mortgage payment. The PITI is easy to use and will do the work for you so you don’t have to find your calculator and try to put your numbers into the calculator yourself.