Ace the PSI Virginia Real Estate Exam 2026 – Step Up to Your Future in Style!

PITI stands for Principal, Interest, Taxes, and Insurance, which are the four primary components of a monthly mortgage payment. Understanding PITI is crucial for both homebuyers and real estate professionals as it provides a comprehensive overview of the total cost of homeownership.

When individuals calculate their monthly housing expenses, they must account for these four elements. The principal is the loan amount that needs to be repaid, while interest represents the cost of borrowing that money. Taxes generally refer to property taxes that homeowners must pay, and insurance usually encompasses homeowners insurance, which protects both the property and the lender's interest.

Having a firm grasp of PITI helps in budgeting and financial planning, ensuring that buyers understand all their obligations beyond just the loan payments. This concept is essential in both the real estate industry and when securing financing, as lenders often evaluate a borrower's ability to pay these full monthly costs before approval.