Method
Loan = home price - down payment. Payment = 30-year fixed monthly payment at the annual rate. Annual buy cost = payment x 12 + home price x maintenance rate / 100. Annual rent = monthly rent x 12.
Estimated equity lift = home price grown at the appreciation rate for the holding years, minus the original loan amount. This is a simplified figure: it does not subtract selling costs or credit the principal you have paid down.
Worked example
| Monthly rent | $1,800 |
|---|---|
| Home price | $420,000 |
| Down payment | $70,000 |
| Annual rate | 6.5% |
| Years | 7 |
| Maintenance rate | 1.2% |
| Appreciation rate | 3% |
| Annual rent | $21,600 |
| Annual buy cost | $31,587 |
| Estimated equity lift | $166,547 |
Assumptions and limits
- Property tax, insurance, closing and selling costs, and the return you could earn by investing the down payment are not modelled.
- The loan term is fixed at 30 years; the "Years" input affects only the appreciation estimate.
Educational estimate only. It is not financial, tax, legal, or investment advice.