· Mortgage Guide 2026 ·
Your real monthly mortgage payment is rarely just "principal and interest." Here's exactly what PITI and PMI mean — and how to calculate your true cost in the USA, UK & Canada.
PITI is the acronym lenders use for the four pieces that make up a full monthly mortgage bill: Principal, Interest, Taxes, and Insurance. Most first-time buyers only budget for the loan payment — principal and interest — and get caught off guard when the real bill arrives higher.
Lenders often bundle taxes and insurance into an escrow account — a holding account they manage on your behalf so those bills are always paid on time, directly from your monthly payment.
Private Mortgage Insurance (PMI) is required on most conventional US loans when your down payment is below 20% of the home's price. It's important to understand: PMI protects the lender if you default — not you.
Example: On a $300,000 home with a 10% down payment ($30,000), PMI typically costs 0.5%–1.5% of the loan amount per year — roughly $112–$338 per month, added on top of your P&I payment.
| Component | Estimated Monthly Cost |
|---|---|
| Principal & Interest (6.5%, 30-yr) | $1,706 |
| Property Taxes (~1.1% annually) | $248 |
| Homeowners Insurance | $120 |
| PMI (0.8% annually) | $180 |
| Total PITI Payment | $2,254 |
Figures are illustrative national averages for 2026 and will vary by state, lender, and credit profile.
PITI is a distinctly American structure. UK and Canadian mortgages break down the same underlying costs differently:
Taxes, insurance, and PMI are typically bundled into one monthly payment via escrow — true PITI.
Mortgage payments cover principal & interest only. Buildings insurance and council tax are billed separately.
Property tax can be escrowed like the US. Down payments under 20% require CMHC mortgage default insurance instead of PMI.
Principal, Interest, Taxes, and Insurance — the four parts of a full US mortgage payment.
PMI is required on most conventional loans when your down payment is under 20%. It's removed once you reach 80% loan-to-value.
Not the same way. The UK bills these separately. Canada may escrow property tax and requires CMHC insurance below 20% down, similar in purpose to US PMI.
Request removal at 80% LTV, or wait for automatic cancellation at 78% LTV under US federal law.
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