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PITI Payments: The Maximum Amount Of Money You Can Borrow

PITI Payments (like pity) plays a major roll in your mortgage. Banks and private lenders look at the total number that your mortgage will cost you to ascertain your credit worthiness. This is calculated by a formula known as PITI Payments Ratio.

What is this PITI Payments?

PITI Payments is the components of a mortgage payment.

PPrincipal is the money used to pay down the balance of the loan

IInterest is the charge you pay to the lender for the privilege of borrowing the money

TTaxes refer to the property taxes you pay as a homeowner

I Insurance refers to both your property insurance and your private mortgage insurance  and homeowners association fees if applicable.

Generally, mortgage lenders prefer PITI to be equal to, or less than 28%, of a borrower’s gross monthly income. PITI is usually calculated on a monthly basis by comparing the borrower’s monthly gross income.

Use this Calculator to calculate your numbers

I went ahead and pulled a sample:

Mortgage Summary
Loan amount $400,000.00
Term 30 years
Interest rate 3.75%
Annual home insurance $950.00
Annual property taxes $10,000.00
Monthly payment (PI) $1,852.46
Monthly payment (PITI)* $2,764.96
Total principal and interest payments $666,887.08
Total interest $266,887.08

Based on the information you entered, A $400,000 mortgage your payment is $2,764.96 for 30 years with a rate of 3.75%. After principal and interest the total payments will be $666,887.08!

The yearly payments will look like this:

Payment Schedule

Year Total
Payments
Principal
Paid
Interest
Paid
Ending
Principal
Balance
$400,000.00
1 $22,229.52 $7,355.08 $14,874.44 $392,644.92
2 $22,229.52 $7,635.69 $14,593.83 $385,009.23
3 $22,229.52 $7,927.01 $14,302.51 $377,082.22
4 $22,229.52 $8,229.44 $14,000.08 $368,852.78
5 $22,229.52 $8,543.39 $13,686.13 $360,309.39
6 $22,229.52 $8,869.33 $13,360.19 $351,440.06
7 $22,229.52 $9,207.69 $13,021.83 $342,232.37
8 $22,229.52 $9,558.98 $12,670.54 $332,673.39
9 $22,229.52 $9,923.69 $12,305.83 $322,749.70
10 $22,229.52 $10,302.28 $11,927.24 $312,447.42
11 $22,229.52 $10,695.33 $11,534.19 $301,752.09
12 $22,229.52 $11,103.37 $11,126.15 $290,648.72
13 $22,229.52 $11,526.97 $10,702.55 $279,121.75
14 $22,229.52 $11,966.74 $10,262.78 $267,155.01
15 $22,229.52 $12,423.28 $9,806.24 $254,731.73
16 $22,229.52 $12,897.24 $9,332.28 $241,834.49
17 $22,229.52 $13,389.29 $8,840.23 $228,445.20
18 $22,229.52 $13,900.12 $8,329.40 $214,545.08
19 $22,229.52 $14,430.43 $7,799.09 $200,114.65
20 $22,229.52 $14,980.97 $7,248.55 $185,133.68
21 $22,229.52 $15,552.53 $6,676.99 $169,581.15
22 $22,229.52 $16,145.86 $6,083.66 $153,435.29
23 $22,229.52 $16,761.86 $5,467.66 $136,673.43
24 $22,229.52 $17,401.34 $4,828.18 $119,272.09
25 $22,229.52 $18,065.22 $4,164.30 $101,206.87
26 $22,229.52 $18,754.44 $3,475.08 $82,452.43
27 $22,229.52 $19,469.91 $2,759.61 $62,982.52
28 $22,229.52 $20,212.73 $2,016.79 $42,769.79
29 $22,229.52 $20,983.87 $1,245.65 $21,785.92
30 $22,231.00 $21,785.92 $445.08 $0.00

 

View our home buying series here: Mortgages, Home Loans, Refinance, and Interest

And don’t forget to follow us on Twitter to be entered into our $50 Giveaway!

In Summary

PITI Payments is the components of a mortgage payment. Principle, Interest, Taxes, Insurance.

 

 

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