`c = ( "r" * "P" )/(1-(1-r)^- "N" ) + "T" /12 + "i" /12 `

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PITI is an acronym for Principal, Interest, Taxes and Insurance. This is a commonly used equation in calculating the monthly PITI payment on a mortgage loan, taxes,
 and insurance. From the equation, the following variable represent:

• c = Monthly PITI Payment
• r = Monthly Interest Rate (in Decimal Form)
• P = Principal Amount on the Loan
• N = Total # of Months for the loan ( Years on the loan x 12)
• T = Yearly Property Tax Amount
• i = Yearly Homeowner's Insurance Amount

 

 

Notes

Example: Monthly PITI payment for 30 year fixed-rate loan, with a principal of $250,000, a yearly interest rate of 6.5%, annual taxes of $1400, and annual insurance of $500 is :

r = (6.5 / 100) / 12 = .005416667

P = 250,000

N = (30 x 12) = 360

T = $1400

i = $500

From the equation, the he Monthly Payment will be $1738.50