The "Hidden" Costs of Buying a Home: Why PITI Matters

You found your dream home listed for $400,000. You run a quick calculation:

●Loan: $320,000 (20% down)
●Rate: 6.5%
●Monthly Payment: $2,022

Sounds affordable, right? Wrong.

That number is just Principal & Interest. You forgot the "Hidden Three": Property Taxes, Home Insurance, and HOA Fees.

When you add those in, that "$2,022" payment suddenly becomes $2,650+.

👉 Calculate Your TRUE Monthly Payment (PITI) → Includes Taxes • Insurance • HOA • US National Averages

What is PITI? (And Why Banks Obsess Over It)

PITI is the acronym lenders use to decide if you can afford a home. It stands for:

●Principal: The money that pays down your loan balance.
●Interest: The money you pay the bank for borrowing.
●Taxes: Property taxes paid to your local county (usually 1.1% - 2.5% per year).
●Insurance: Homeowners insurance to protect against fire/theft.

The Mistake Buyers Make: They only budget for "P&I" (Principal + Interest). But "T&I" (Taxes + Insurance) can add 30-40% to your monthly bill.

How to Estimate Your Real Monthly Payment

Let's break down the math for a $400,000 home in 2026.

1. Principal & Interest (The Bank's Cut)

At a 6.5% interest rate on a 30-year fixed loan:

●Loan Amount: $320,000
●P&I Payment: $2,022 / month

2. Property Taxes (The County's Cut)

US National Average is ~1.1%, but high-tax states like NJ or TX can be 2%+.

●Calculation: $400,000 * 1.2% / 12
●Tax Payment: $400 / month

3. Home Insurance (The Safety Net)

Average US premium is ~$1,500/year, but higher in FL/CA.

●Calculation: $1,500 / 12
●Insurance Payment: $125 / month

4. HOA Fees (The Community Tax)

Buying a Condo or in a Planned Community? Don't forget this.

●HOA Payment: $250 / month (Average)

💀 The Final Tally

●Expectation: $2,022
●Reality: $2,797

That is a $775 difference every single month.

👉 Run Your Own Numbers Now →

The 28/36 Rule: Can You Actually Afford It?

Banks use the 28/36 Rule to approve loans. Here is how to check if you pass:

●Front-End Ratio (28%): Your PITI payment should not exceed 28% of your Gross Monthly Income.
●Back-End Ratio (36%): Your PITI + All Other Debt (Cars, Student Loans, Credit Cards) should not exceed 36% of gross income.

Example: If you earn $100,000/year ($8,333/month):

●Max Housing Payment (28%): $2,333
●Max Total Debt (36%): $3,000

If your new mortgage is $2,797 (from our example above), you would likely be denied or effectively "house poor."

Mortgage FAQ

Q: Do I really need 20% down?

No. First-time buyers often put down 3% (Conventional) or 3.5% (FHA). However, putting less than 20% down triggers PMI (Private Mortgage Insurance), which adds another 0.5% - 1% to your yearly costs.

Q: What is an Amortization Schedule?

It's a table showing how much of your payment goes to Interest vs. Principal.

●Year 1: ~80% of your payment goes to Interest (pure profit for the bank).
●Year 20: ~60% goes to Principal (equity for you).
●Our calculator generates this schedule automatically.

Q: Does this calculator work for Taxes?

Yes. We pre-fill the US National Average (1.2%), but you can edit it based on your state (e.g., set to 2.2% for Texas).

Plan Before You Offer

Don't wait until you are sitting in a closing office to find out your payment is $500 higher than expected.

Use our Mortgage Calculator to:

●Toggle Property Tax rates
●Add HOA fees
●See the full Amortization Schedule

Start Calculating →

Calculate Mortgage Payment with PITI & HOA - The Truth About Affordability