What Makes Up Your Mortgage Payment (PITI)

Lenders quote you a rate, but you pay a payment — and the two aren't the same thing. A mortgage payment is built from four parts that go by the shorthand PITI: principal, interest, taxes, and insurance. Knowing which piece is which tells you what you can change and what you can't.

P and I — the loan itself

Principal is the slice that pays down what you borrowed; interest is the lender's charge on the balance. Together they're the "P&I," the only part your rate and term actually set — and the part a calculator computes. Early on, most of each payment is interest; as the balance falls, the mix tilts toward principal. That shift is amortization.

T and I — the parts that aren't really the loan

Taxes and insurance are property costs the lender collects alongside P&I and holds in escrow to pay on your behalf. They have nothing to do with your rate — which is exactly why two loans at the same rate can carry very different payments in different counties. When people say a "fixed" payment went up, it's almost always T or I moving, not P&I.

The extras: MI and HOA

Two more can ride along. If you put less than 20% down, mortgage insurance is added until you can remove it. And if your home is in an association, HOA dues are a separate bill — not part of PITI and not escrowed, but very real in your monthly budget.

Only the first line moves with your rate; taxes and insurance depend on the property and county, which is why identical rates can carry very different payments.

By L.W. Martin, Founder — 20 years in the mortgage business, including 15 running his own brokerage. About → · Updated September 2026.