What is PITI? Deciphering Your Home Loan Payment

Taking out a home loan is a tremendous financial investment, and your mortgage payment may end up being your largest monthly expenditure. As such, you may appreciate knowing where your money will be going.

The price of your northern Utah home is included, but contrary to what you might think, you won’t just paying back the funds you borrow. Below, the Intercap Lending team explains the four parts of a home loan payment – principal, interest, taxes and insurance, known collectively as PITI – as well as other potential mortgage-related monthly costs.

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The principal portion of your monthly home loan payment will go toward the amount of your debt. Your initial principal balance will be the sale price of your home, minus your down payment.


Interest is the cost of borrowing money to buy a home, and this portion of your payment will go directly to your lender. Your interest rate will remain the same if you take out a fixed-rate home loan, but with an adjustable-rate mortgage, it may fluctuate.


As a homeowner, you’ll have to pay property taxes every year. Your local government will be the recipient of your tax payment, but your mortgage lender will collect a portion each month, placing the money in an escrow account until the due date arrives.


Your monthly home loan payment will also cover your homeowners insurance, which protects you in the event of loss or damage to your property. As with your taxes, your lender will hold the funds in escrow until your insurance payment is due.

Potential Mortgage-Related Monthly Costs

Though principal, interest, taxes and insurance are the four key components of a mortgage payment, many northern Utah homeowners have other related monthly expenses. Depending upon your situation, you may need to budget for one or both of the following:

Private Mortgage Insurance

Put down less than 20 percent on your home loan, and you’ll be required to carry private mortgage insurance. PMI protects your lender if you default on your loan, and the amount charged each month is a portion of the total premium, which is generally between .5 and 2 percent of the principal.

Homeowners Association Dues

Buy a home in a subdivision or private development, and you may be required to join the community’s homeowners association. That comes with monthly fees, which are used to maintain common areas – and depending upon your HOA, your dues could add up to as much as a few hundred dollars.

If you’re in northern Utah and want help exploring your home loan options, reach out to Intercap Lending. We know the mortgage industry, and with our decades of experience, we know how to simplify the financing process.

Our highly skilled Utah mortgage lenders are here to meet your needs, and we’d love to provide you with a free, no-obligation consultation. For more information on the Intercap Lending team and how we can assist you in getting your dream house and an affordable home loan payment, contact us today.