PITI Explained: What's Actually in Your Mortgage Payment
The four pieces
PITI is shorthand for the four components that typically make up a monthly mortgage payment:
Principal — the portion of your payment that reduces what you actually owe on the loan.
Interest — the cost of borrowing the money, paid to your lender on top of principal.
Taxes — property tax, collected by your lender each month and forwarded to your local government on your behalf.
Insurance — homeowner's insurance, and PMI if you put down less than 20%, protecting both you and the lender's investment in the home.
What it looks like on a real payment
On a $400,000 home with 20% down ($320,000 loan) at 6.5% over 30 years, here's how a typical payment splits:
| Monthly | % of payment | |
|---|---|---|
| Principal & Interest | $2,023 | 81% |
| Property tax | $367 | 15% |
| Home insurance | $117 | 5% |
| Total (PITI) | $2,507 | 100% |
In this example, principal and interest make up the large majority of the payment — but that split isn't fixed. It depends heavily on where the home is.
What you can and can't control
Principal and interest are locked in at closing. On a fixed-rate loan, this portion of your payment is determined entirely by your rate and term — once you close, it doesn't change for the life of the loan.
Property tax is set by your local government. It's based on your home's assessed value and the local tax rate — not something you negotiate, but it's visible and estimable before you buy.
Insurance is the one piece you can actively shop. Different insurers quote meaningfully different premiums for the same coverage on the same home — this is the component most worth comparing before you commit to a policy.
Why the split varies so much by location
Take the exact same loan — same $320,000 balance, same 6.5% rate, same $2,023 P&I — and place the home in two different tax environments:
In a low-tax area (0.5% property tax rate, $1,000/year insurance): taxes run about $167/month and insurance about $83/month. Total payment: $2,273/month. Taxes and insurance make up roughly 11% of the payment.
In a high-tax area (2.0% property tax rate, $2,200/year insurance): taxes run about $667/month and insurance about $183/month. Total payment: $2,873/month. Taxes and insurance make up roughly 30% of the payment.
Same loan, same rate, same P&I — but the total payment differs by about $600/month purely based on location. Taxes and insurance are typically collected through an escrow account, which is also why your payment can change after closing even on a fixed-rate loan — if your tax assessment or insurance premium goes up, your escrow payment adjusts to match.
Key takeaways
- PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a typical mortgage payment.
- On a $400k home with 20% down, P&I typically makes up roughly 80% of the payment, with taxes and insurance making up the rest.
- Principal and interest are fixed at closing on a fixed-rate loan and won't change.
- Property tax and insurance are usually collected through an escrow account and forwarded on your behalf.
- The same loan can have a very different total payment depending on local property tax rates — taxes and insurance can range from about 11% to 30% of the payment.
- Insurance is the one PITI component you can actively shop and reduce.
See your own PITI breakdown
Enter your numbers to see exactly how your payment splits.