Lenders qualify a borrowers Debt To Income ratio (DTI) using Principal Interest Taxes and Insurance (PITI) combined even though some borrowers only want to pay the principal and interest to the lender and pay the taxes directly to their local government and insurance directly to their insurance provider.

Other monthly payments that are included in the PITI include Mortgage Insurance and Home Owners Association (HOA) dues.

Lenders often require cash reserves equal to several months PITI, in order to qualify a borrower.

Investment properties often require a minimum of 6 months PITI reserves for a mortgage, primary properties may not require any reserves depending upon credit, and many subprime lenders do not require any reserves.

The total PITI payment is used to calculate qualifying factors such as your debt ratio and the amount of cash reserves that may be required on a loan. Even if a borrower chooses to waive an escrow account and pay the taxes and insurance themselves.

PITI is the total monthly payment that must be made for that mortgage loan. Many times taxes and insurance are only estimated by the mortgage broker giving a quote which is why different good faith estimates vary so much from broker to broker. Always ask for the PI payment to compare loan programs as well as the APR which includes the real total cost of the loan.

Lenders use the proposed PITI together with the borrower's income to evaluate the borrower's capability to repay the loan.