Principal, Interest, Taxes, Insurance and Association Dues (PITIA) basics

Principal, Interest, Taxes, Insurance, and Association Dues (PITIA) is a term used in mortgage lending that refers to the total monthly payment made by the borrower. The payment includes the principal and interest on the loan, property taxes, homeowners insurance, and any dues for a homeowners' association if applicable.

When a borrower applies for a mortgage loan, the lender will calculate the PITIA to ensure the borrower can afford the monthly payments. The lender will typically require the PITIA to be no more than a certain percentage of the borrower's monthly income, known as the debt-to-income (DTI) ratio. This ratio is an important factor in determining whether a borrower qualifies for a loan and how much they can borrow.

It is important for borrowers to understand their PITIA and how it affects their overall mortgage payment. In addition to the principal and interest on the loan, property taxes and homeowners insurance are typically included in an escrow account that is managed by the lender. This ensures that these expenses are paid on time and that the property is adequately insured.