PITI stands for principal, interest, taxes and insurance: the four parts of a typical monthly mortgage payment. Principal and interest go to the lender to repay the loan. Property taxes and property insurance are often collected with the payment and held in an escrow account until the bills come due.
PITI = principal + interest + monthly property taxes + monthly insurance
Say you borrow $200,000 at a fixed 7% for 30 years. Principal and interest come to about $1,331 a month. Property taxes of $3,600 a year add $300 a month, and insurance of $1,200 a year adds $100. PITI is $1,331 + $300 + $100 = $1,731 a month. If the loan carries mortgage insurance or the property has HOA dues, add those too.
Lenders use PITI to judge whether you can carry a loan, and many lenders offering DSCR loans on small rentals compare the rent to it. The common mistake is treating PITI as the full cost of owning a rental. A property that rents for exactly $1,731 loses money once you count vacancy, repairs, capital expenditures and management, which all come on top. PITI also moves over time: taxes and insurance premiums can rise even when the loan rate is fixed. Run your own payment in the investment property mortgage calculator.