The four components of a typical monthly mortgage payment.
Principal: the portion that reduces the loan balance.
Interest: the cost of borrowing.
Taxes: 1/12 of annual property tax (paid through escrow).
Insurance: 1/12 of annual homeowners insurance premium (paid through escrow).
Lenders evaluate affordability based on PITI — typically capping it at 28% of gross monthly income. PMI and HOA dues are sometimes included in the broader 'housing cost' figure.
Our calculator's monthly hero shows the full PITI total, with each component broken out below.