When purchasing a property in Edmonton, St. Albert, or Sturgeon County, many homebuyers focus only on the mortgage payment. However, your true monthly housing cost involves more than just principal and interest. That’s where the concept of P.I.T.H.—an acronym for Principal, Interest, Taxes, and Heating—comes into play. Understanding P.I.T.H. can help buyers make realistic budgeting decisions and determine what they can comfortably afford.
What Does P.I.T.H. Stand For?
According to the Canadian Real Estate Association (CREA) and lenders across Alberta, P.I.T.H. is used to assess housing affordability and determine mortgage qualifications. Here’s what each component means:
- Principal: The portion of your mortgage payment that reduces the original loan amount.
- Interest: The cost charged by your lender for borrowing the mortgage funds, expressed as an annual rate.
- Taxes: Property taxes levied by your local municipality—such as the City of Edmonton or City of St. Albert.
- Heating: The estimated monthly cost to heat your home, which lenders often estimate at a minimum of $100–$150 per month in most parts of Alberta.
Why Is P.I.T.H. Important for Homebuyers?
Mortgage lenders across Canada use P.I.T.H. to calculate your Gross Debt Service (GDS) ratio — a measure of what portion of your income goes toward housing expenses. This ratio helps ensure you’re not taking on more debt than you can sustain, given local property values and energy costs in Alberta’s climate.
- Affordability Assessments: Lenders typically want your P.I.T.H. and other housing expenses to stay below 32% of your gross monthly income.
- Market Variations: Municipal taxes differ significantly between Edmonton, St. Albert, and rural Sturgeon County—so it’s wise to research before committing to a property.
- Energy Costs: Homes with better insulation or modern high-efficiency heating systems can reduce monthly costs, helping you stay within your budget.
How to Calculate Your P.I.T.H. Manually
To estimate your monthly housing budget, consider the following steps:
- Use an online mortgage calculator to estimate your monthly principal and interest payments.
- Consult your municipality’s website for property tax rates and divide yearly taxes by 12.
- Add your estimated monthly heating cost, based on your home’s energy type (natural gas, electric, etc.).
- Sum these amounts for your total P.I.T.H. estimate.
Beyond P.I.T.H.: Other Homeownership Costs
Although P.I.T.H. gives a strong foundation, it’s important to consider additional costs that affect your full homeownership budget:
- Condo fees (if applicable)
- Home insurance
- Maintenance and repairs
- Utilities beyond heating, such as electricity, water, and internet
Making an Informed Decision in Alberta’s Real Estate Market
Whether you’re buying a character home in Edmonton’s Glenora, a new build in St. Albert, or an acreage in Sturgeon County, understanding your complete monthly housing cost helps you work realistically with your REALTOR®. By factoring in P.I.T.H. and other expenses, you can make confident decisions aligned with your financial goals.
For guidance specific to your area, connect with an experienced Alberta REALTOR®—a professional member of the Canadian Real Estate Association—to ensure your next real estate purchase is both affordable and future-focused.