Is it standard for lenders to include insurance & mortgage & taxes to prequal me?

Absolutely. All the the debt that reports to your credit plus any proposed housing payment including Home owners insurance, taxes, and any monthly mortgage insurance as well.

Yes they are going to include any payment that is going to affect your debt to income ratio. The housing portion will always include Principal interst taxes and hazard insurance, if there is mortgage insurance that will be included and any HOA dues as well. No matter if you chose to pay those out side your payment or not.

YES... The full picture is what you will need to pay, so it only makes sense the full picture of PITI is what we pre-qualify you based upon.