The payment factor is per $1,000 of loan
Exam questions hand you a factor such as $6.32 per $1,000 at 6.5% for 30 years rather than making you run the amortization formula. Divide the loan by 1,000, then multiply: $180,000 ÷ 1,000 = 180, and 180 × $6.32 = $1,137.60. Every distractor here is a decimal slip — dividing by an extra ten gives $113.76, and multiplying by 1,800 instead of 180 gives $11,376.00.
PITI adds one-twelfth of each annual item
PITI is principal and interest plus 1/12 of annual taxes plus 1/12 of annual insurance, escrowed monthly. With P&I of $1,580.17, $3,000 annual taxes and $1,200 annual insurance: $1,580.17 + ($3,000 ÷ 12 = $250) + ($1,200 ÷ 12 = $100) = $1,930.17. Adding the full annual $3,000 and $1,200 to a monthly payment without dividing by 12 gives $5,780.17, and that failure to divide is the trap the exam plants repeatedly.
Interest is charged first, then principal
For any single month, interest = balance × annual rate ÷ 12; the principal portion is whatever the payment leaves over. On a $250,000 loan at 6.5% with a $1,580.17 payment: interest = $250,000 × 0.065 ÷ 12 = $1,354.17, so principal = $1,580.17 − $1,354.17 = $226.00 and the new balance is $249,774.00. Using the annual 6.5% without dividing by 12 gives $16,250.00.
FHA adds monthly mortgage insurance
On an FHA loan the annual MIP is collected monthly on top of PITI: annual MIP rate × loan ÷ 12. At 0.55% on $250,000 that is 0.55% × $250,000 ÷ 12 = $114.58. Added to PITI of $1,580.17 + $250 + $100 = $1,930.17, the total is $2,044.75. Omitting the mortgage insurance and answering $1,930.17 is the most common error on FHA payment questions. The 1.75% figure is the upfront MIP, a one-time charge usually financed, not a monthly one.