PITIA.
What it actually means.

What it is

PITIA is the whole monthly obligation of owning a financed property, not just the part paid to the lender. The two letters investors most often drop — the second T for taxes and the A for association dues — are precisely the ones that move most between properties and reprice after a purchase. Lenders use PITIA because it is what a borrower must actually pay every month for the property to remain theirs, and it is the figure that sits in the denominator of debt service coverage.

How it is calculated

Add the monthly components: principal and interest from the amortization schedule, one-twelfth of the annual property tax bill, one-twelfth of the annual insurance premium, and any association dues. A property with $1,050 of principal and interest, $3,000 of annual taxes, $1,320 of annual insurance, and $30 monthly dues comes to about $1,440 — nearly 40% above the principal-and-interest figure alone. Special assessments and flood insurance, where required, belong in the same stack even though they sometimes arrive on a separate bill.

PITIA = principal + interest + property taxes + insurance + association dues, all monthly. A $1,050 principal-and-interest payment with $250 taxes, $110 insurance, and $30 dues is $1,440.

How investors actually use it

PITIA is the denominator in DSCR, so it decides whether a deal is financeable before it decides whether the deal is good. It is also the honest basis for cash flow: subtract PITIA and the operating expenses that sit outside it — maintenance, vacancy, management, and reserves — from rent, and what remains is what the property actually produces. Investors comparing two properties at the same price frequently find the cheaper monthly obligation belongs to the one in the lower-tax jurisdiction without an association, a difference invisible in the list price. Running PITIA across a shortlist before touring is a fast way to rank properties by what they will genuinely cost to hold rather than by what they cost to buy.

The common mistake

Carrying the seller’s tax and insurance figures into your own model. Property taxes are commonly reassessed after a sale, and an owner-occupant exemption the seller enjoyed generally does not transfer to an investor, so the bill can jump substantially the year you buy. Insurance has repriced sharply in many regions. Both vary by state and by property — get a written insurance quote and check the assessor’s treatment of a sale with a professional in that jurisdiction before you rely on the payment.