Real Estate Calculator
- Updated
- Formula shown
- Free, no sign-up
Results
After 10 years, net sale proceeds of $234,029 against $451,938 paid in: a −$217,910 gain, ROI −48.22%, −12.99% a year.
- Mortgage interest
- $193,998
- Tax, insurance, HOA and maintenance
- $119,224
- Closing and selling costs
- $42,254
- Price growth
- $137,567
| Year | Home value | Loan balance | Equity | Mortgage paid | Ownership costs | Total paid so far |
|---|---|---|---|---|---|---|
| 1 | $412,000 | $316,423 | $95,577 | $24,271 | $10,400 | $124,671 |
| 2 | $424,360 | $312,607 | $111,753 | $24,271 | $10,712 | $159,655 |
| 3 | $437,091 | $308,535 | $128,556 | $24,271 | $11,033 | $194,960 |
| 4 | $450,204 | $304,191 | $146,013 | $24,271 | $11,364 | $230,595 |
| 5 | $463,710 | $299,555 | $164,155 | $24,271 | $11,705 | $266,572 |
| 6 | $477,621 | $294,609 | $183,012 | $24,271 | $12,056 | $302,900 |
| 7 | $491,950 | $289,332 | $202,618 | $24,271 | $12,418 | $339,589 |
| 8 | $506,708 | $283,701 | $223,007 | $24,271 | $12,791 | $376,652 |
| 9 | $521,909 | $277,694 | $244,216 | $24,271 | $13,174 | $414,097 |
| 10 | $537,567 | $271,284 | $266,283 | $24,271 | $13,570 | $451,938 |
Without rent coming in, the home's growth doesn't cover the costs you never get back. That is normal for a home you live in: you also save the rent you would otherwise pay, which this calculator leaves out. Compare both with the rent vs buy calculator.
Growth rates are assumptions, not predictions. Results are before income tax and ignore any tax deductions or capital gains tax.
How to use the real estate calculator
- Enter the purchase price, down payment and closing costs, then the mortgage rate and term. A 100% down payment models a cash purchase.
- Add the yearly property tax and insurance, any HOA dues and a maintenance allowance as a share of the home's value.
- Choose an assumed growth rate for the home's value and for the running costs, how many years you will own it and the selling costs.
- Read the net proceeds, gain or loss and annualized return. The year-by-year table shows the value, loan balance and equity.
Real estate investment formulas
Net proceeds = sale price − selling costs − loan balance
Total paid in = down payment + closing + mortgage payments + tax, insurance, HOA and maintenance
Gain = net proceeds − total paid in = price growth − total cost of ownership
ROI = gain ÷ total paid in
Annualized return = IRR of −(cash at purchase), −(yearly costs), …, + net proceeds
The total cost of ownership is the money you never get back: closing costs, mortgage interest, property tax, insurance, HOA dues, maintenance and selling costs. Principal repayments are not a cost, because they come back to you as equity when you sell. That is why the gain is simply the price growth minus those costs. The annualized return is the internal rate of return of the yearly cash flows, so it accounts for when each dollar is paid.
Worked example
You buy a $400,000 home with 20% down ($80,000) and $10,000 of closing costs. The $320,000 mortgage at 6.5% for 30 years costs $2,022.62 a month. Tax is $4,800 a year, insurance $1,600, and maintenance 1% of the value; the home and the running costs are assumed to grow 3% a year.
After 10 years the home is worth $537,567 and you owe $271,284, so your equity is $266,283. Selling costs of 6% ($32,254) leave net proceeds of $234,029. Over the decade you paid in $451,938: the down payment, closing costs, $242,714 of mortgage payments and $119,224 of ownership costs. The home gained $137,567 in value, but the costs you never recover came to $355,476, including $193,998 of interest. The result is a loss of $217,910, an ROI of −48.22% and an annualized return of −12.99%.
The home would have to grow about 6.89% a year to pay back everything you put in. Bought for cash, with no interest to cover, the break-even growth would fall to 3.5%. None of this counts the rent you no longer pay, which is the main financial benefit of owning the home you live in. To include it, use the rent vs buy calculator.
Results by growth rate
The example home held for 10 years. Growth rates are assumptions for illustration, not forecasts.
| Value growth a year | Sale price | Net proceeds | Gain or loss | ROI |
|---|---|---|---|---|
| 0% | $400,000 | $104,716 | −$341,367 | −76.53% |
| 2% | $487,598 | $187,058 | −$262,824 | −58.42% |
| 3% | $537,567 | $234,029 | −$217,910 | −48.22% |
| 4% | $592,098 | $285,288 | −$168,819 | −37.18% |
| 5% | $651,558 | $341,181 | −$115,214 | −25.24% |
| 6% | $716,339 | $402,075 | −$56,731 | −12.36% |
| 7% | $786,861 | $468,365 | $7,017 | 1.52% |
Break-even growth by holding period
The yearly growth the example home needs before the sale pays back everything paid in. Longer stays spread the buying and selling costs over more years.
| Years owned | Break-even value growth |
|---|---|
| 3 | 10.29% a year |
| 5 | 8.63% a year |
| 7 | 7.74% a year |
| 10 | 6.89% a year |
| 15 | 5.98% a year |
| 20 | 5.33% a year |
| 30 | 4.38% a year |
Reading the results
- A loss here doesn't mean buying is a mistake. You need somewhere to live either way; this page measures the home only as an asset.
- Short stays are expensive. Closing and selling costs are fixed hits. Owning for only a few years means the home has to grow fast just to cover them.
- Leverage cuts both ways. A small down payment magnifies gains when prices rise, but the interest is a cost you pay whatever happens.
- Test a flat market. Set growth to 0% to see the downside. Prices can fall as well as rise.
- Taxes are left out. Mortgage interest and property tax may be deductible, and a gain on a main home may be partly tax-free depending on where you live. Ask a tax professional.
Planning to rent the property out instead? The rental property calculator adds rent, vacancy and management. For the monthly payment alone, use the mortgage calculator.
Frequently asked questions
Is a house a good investment?
It depends on growth, costs and how long you stay. A $400,000 home with 20% down at 6.5%, held 10 years with 3% assumed growth, sells for about $537,567 but returns $217,910 less than you paid in once interest, tax, insurance, maintenance and selling costs are counted. It ignores the rent you save by living there.
What is the total cost of owning a home?
The money you never get back: closing costs, mortgage interest, property tax, insurance, HOA dues, maintenance and selling costs. Principal payments are not a cost because you recover them as equity. In the example it comes to $355,476 over 10 years.
How much does a home need to appreciate to break even?
In the example, about 6.89% a year over 10 years, or 5.33% a year over 20 years. Bought for cash, the 10-year break-even falls to about 3.5% a year, because there is no interest to cover.
How is home equity different from profit?
Equity is the home value minus the loan balance: $266,283 after 10 years in the example. Profit also subtracts selling costs and everything you paid along the way, including interest, tax and maintenance.
What appreciation rate should I use?
There is no safe figure. Local prices can rise, stall or fall. Try several rates, including 0%, and treat each one as an assumption, not a forecast.