1. A buyer earns $8,000 per month gross. Using a 28% front-end ratio, what is the maximum monthly housing payment (PITI)?
Answer & explanation
Answer: B. $8,000 x 0.28 = $2,240. $2,880 uses the 36% back-end ratio.
finance
PITI
An acronym for principal, interest, taxes, and insurance, the four components of a typical monthly mortgage payment when the lender collects property taxes and homeowners insurance through an escrow account. Lenders use PITI to calculate housing expense and debt-to-income ratios when qualifying borrowers. Mortgage insurance or HOA dues may also be included in qualifying calculations.
- Exam tip
- Qualification ratios use PITI, not just principal and interest. Taxes and insurance are usually paid through an escrow (impound) account.
- Example
- A buyer's payment includes $1,400 principal and interest, $350 taxes, and $100 insurance, for a PITI of $1,850 a month.
Related terms & state variants
Sources
Source verification pending. Confirm current requirements with your state regulator.
Last verified: 2026-10-23