What Is Piti Ratio

PITI is an acronym for principal, interest, taxes, and insurance—the sum components of a mortgage payment. … PITI is also included in calculating a borrower’s back-end ratio, the sum total of his monthly obligations against his gross income.

How is PITI ratio calculated?

Divide your PITI by your total monthly income to find your ratio. If you earn $7,000 a month, your PITI would make up about 26% of your monthly budget, which means that the property could be a reasonable choice for your finances.

What is the 28 36 rule?

A Critical Number For Homebuyers One way to decide how much of your income should go toward your mortgage is to use the 28/36 rule. According to this rule, your mortgage payment shouldn’t be more than 28% of your monthly pre-tax income and 36% of your total debt. This is also known as the debt-to-income (DTI) ratio.