Where this fits on the exam
| Official syllabus topic | XI.A.5 PITI payments estimate given loan rate and term |
|---|---|
| Official PSI area | Real Estate Calculations |
| Published weight | 7% of the national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual calculation. Follow the stated facts, units, time basis, and rounding instruction.
Formula and variables
| Symbol or term | Meaning |
|---|---|
| P and I | Monthly principal-and-interest payment from the stated terms, factor, or supplied payment |
| T | Monthly property-tax amount |
| I | Monthly homeowners-insurance amount |
Step-by-step method
- Find the monthly principal-and-interest payment using the information or factor the question supplies.
- Convert annual property tax to monthly by dividing by 12.
- Convert annual homeowners insurance to monthly by dividing by 12.
- Add the requested components and any additional housing cost expressly stated.
- Do not confuse the principal balance with the principal portion of one monthly payment.
Georgia-specific distinction
Worked examples
Example 1: Add annual taxes and insurance
Scenario. Monthly principal and interest is $1,540. Annual property tax is $4,800 and annual homeowners insurance is $1,800.
- Monthly tax = $4,800 / 12 = $400.
- Monthly insurance = $1,800 / 12 = $150.
- PITI = $1,540 + $400 + $150 = $2,090.
Answer. Monthly PITI is $2,090.
Reasonableness check. Taxes and insurance add $550 to the principal-and-interest payment.
Example 2: Use a supplied payment factor
Scenario. A question gives a principal-and-interest factor of $6.00 per $1,000 borrowed on a $240,000 loan. Annual tax is $3,600 and annual insurance is $1,200.
- $240,000 / $1,000 = 240 loan units.
- Principal and interest = 240 x $6.00 = $1,440.
- Monthly tax = $300 and monthly insurance = $100.
- PITI = $1,440 + $300 + $100 = $1,840.
Answer. Monthly PITI is $1,840.
Reasonableness check. The supplied factor controls. No independent interest-rate estimate is needed.
Common exam traps
- Adding annual taxes and insurance to a monthly mortgage payment
- Omitting taxes or insurance
- Using the sale price rather than loan amount with a payment factor
- Assuming association dues or mortgage insurance are inside PITI when the question treats them separately
Original practice questions with detailed explanations
These original instructional questions map to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Write the setup before opening the explanation.
Question 1Monthly principal and interest is $1,860. Annual property taxes are $5,160 and annual homeowners insurance is $1,620. What is monthly PITI?
- A. $1,995
- B. $2,290
- C. $2,425
- D. $8,640
Show answer and explanation →
Answer: C. $2,425
Monthly taxes are $430 and monthly insurance is $135, so PITI is $1,860 + $430 + $135 = $2,425. $8,640 adds the annual taxes and insurance straight to a monthly payment. $2,290 leaves out insurance.
- A. Incorrect. $1,995 adds monthly insurance to principal and interest but omits monthly taxes.
- B. Incorrect. $2,290 adds the $430 monthly tax but omits the $135 monthly insurance.
- C. Correct. $1,860 plus $430 monthly taxes plus $135 monthly insurance equals $2,425.
- D. Incorrect. $8,640 adds annual taxes and insurance directly to a monthly principal-and-interest payment.
Question 2A buyer pays $325,000 with 20% down. The lender's factor is $6.65 per $1,000 of loan for monthly principal and interest. What is the monthly principal-and-interest payment?
- A. $432.25
- B. $1,729.00
- C. $2,161.25
- D. $17,290.00
Show answer and explanation →
Answer: B. $1,729.00
The loan is $260,000, or 260 units of $1,000, and 260 x $6.65 = $1,729. $2,161.25 applies the factor to the sale price instead of the loan. $432.25 applies it to the down payment.
- A. Incorrect. $432.25 applies the payment factor to the $65,000 down payment instead of the loan.
- B. Correct. The $260,000 loan contains 260 $1,000 units; 260 times $6.65 equals $1,729.
- C. Incorrect. $2,161.25 applies the factor to the entire $325,000 price.
- D. Incorrect. $17,290 counts $100 loan units instead of $1,000 units, making the payment ten times too large.
Question 3A Georgia home has a $300,000 fair market value, assessed at 40%, with a 30-mill rate and no exemptions. Monthly principal and interest is $1,500 and annual insurance is $1,440. What is monthly PITI?
- A. $1,620
- B. $1,920
- C. $2,370
- D. $5,220
Show answer and explanation →
Answer: B. $1,920
Assessed value is $120,000, annual tax is $120,000 x 0.030 = $3,600, or $300 a month, so PITI is $1,500 + $300 + $120 = $1,920. $2,370 applies the millage to full fair market value and skips the 40% assessment. $5,220 adds the annual tax instead of one month's share.
- A. Incorrect. $1,620 omits the $300 monthly property-tax component.
- B. Correct. $120,000 assessed value at 30 mills produces $300 monthly tax; add $1,500 principal and interest and $120 insurance for $1,920.
- C. Incorrect. $2,370 taxes full market value instead of its 40% assessed value.
- D. Incorrect. $5,220 adds the $3,600 annual tax without dividing it by 12.
Ready to move on?
You have this calculation down when all of these are true.
- I keep monthly and annual amounts on the same period.
- I use a supplied loan-payment factor correctly.
- I can name all four PITI components.
- I add extra housing costs only when the question directs me to.
- I can connect a Georgia annual property-tax result to monthly PITI.
Recommended next lesson
Continue with Discount Points and Origination Fees. The next lesson covers upfront loan costs, where each discount point is 1% of the loan amount rather than the price.
Return to the complete calculation hub, formula sheet, or mixed math drill.