PITI stands for which of the following?

• A. Principal, Interest, Taxes, & Investments
• B. Principal, Interest, Taxes, & Insurance
• C. Payment, Insurance, Taxes, Interest
• D. Principal, Interest, Taxes, & Insurance

Answer: (D)

PITI refers to the four parts that commonly make up a monthly mortgage payment: principal, interest, taxes, and insurance. The principal is the portion that reduces the loan balance, while the interest is the lender’s charge for borrowing. Property taxes are what you owe to the local government, and homeowners insurance protects the home. In many loans, taxes and insurance are collected in escrow and paid on your behalf when due.

This exact grouping—Principal, Interest, Taxes, & Insurance—is the standard terminology used to describe a mortgage payment breakdown, so it matches how PITI is defined. The other options include an item like Investments, which isn’t part of a mortgage payment, or replace the first component with a nonstandard term like Payment, which doesn’t reflect the specific loan components.