What is PITI and why does it matter? +
PITI stands for Principal, Interest, Taxes, and Insurance — the four components of your complete monthly mortgage payment. Most mortgage calculators online only show principal and interest (P&I), which can significantly understate your actual monthly cost. PITI is the number lenders use to calculate your debt-to-income ratio, and it's the number you'll actually write a check for each month.
How is monthly mortgage interest calculated? +
Monthly principal and interest is calculated using a fixed amortization formula: Payment = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments. In the early years of your loan, most of each payment goes to interest. As the loan matures, more goes to principal.
When is PMI required, and when can I remove it? +
PMI (Private Mortgage Insurance) is required on conventional loans when your down payment is less than 20% of the home purchase price, meaning your loan-to-value ratio (LTV) exceeds 80%. By law (Homeowners Protection Act), lenders must automatically cancel PMI when your loan balance reaches 78% of the original purchase price. You can request removal at 80% LTV — which may require a new appraisal to confirm the home's value.
What is a good debt-to-income ratio for a mortgage? +
Most conventional lenders look for a front-end DTI (housing costs only / gross income) below 28% and a back-end DTI (all debts including housing / gross income) below 36%. FHA loans allow up to 43% back-end DTI. The lower your DTI, the more likely you are to be approved at competitive rates. DTI above 50% generally disqualifies most borrowers from conventional financing.
How much does a 0.5% rate difference affect my payment? +
On a $300,000 30-year mortgage, a 0.5% difference in interest rate changes the monthly P&I payment by approximately $90–$100 per month and changes total interest paid over the life of the loan by roughly $30,000–$35,000. Over 30 years, even a 0.25% rate improvement from shopping lenders can save $15,000–$17,000 in total interest.
What are typical closing costs? +
Closing costs typically range from 2% to 5% of the purchase price. On a $350,000 home, expect $7,000–$17,500 in closing costs. These include lender origination fees (0.5%–1%), title insurance, appraisal, attorney fees (where required by state law), recording fees, transfer taxes (vary widely by state), and prepaid items like the first year's homeowners insurance and property tax escrow deposits. Use our state-by-state closing costs calculator for a detailed estimate.
