Mortgage ROI Calculator

Created by Garrett Edel Github/Personal

There are a lot of mortgage calculators out there, but they cluster around very basic questions -- what will my mortgage payment be, how expensive of a house can I afford, or when is it cheaper to rent or buy. But there's another question many fail to answer: Is buying actually the best use of your money, or might you be better off renting? The Mortgage ROI calculator does just that. Enter your assumptions and it takes care of the rest.

Total price of the home in dollars, excluding closing costs, appraisals, etc.

%

Down payment percent of the purchase price. If less than 20%, requires PMI insurance of 1% of the loan balance until you hit 20% principal paid. If the appreciation of the home is greater than the interest rate, a lower down payment increases the investment returns.

%

The mortgage rate is best thought of as the cost of 'renting' the money that you are borrowing. The higher the interest rate, the greater the loan payment each month and the lower the returns.

%

Yearly value appreciation - Sustaining long-term yearly appreciation over 5% is historically unlikely (see below).

Annualized returns to Dec 2017 by purchase year

City 1997 2002 2007 2012
New York 4% 2% 0% 4%
Chicago 2% 1% -1% 4%
Phoenix 4% 3% -1% 7%
Dallas NA 3% 4% 8%
Atlanta 2% 1% 1% 8%
San Francisco 6% 4% 3% 11%

Source

Monthly rent you would pay if you do not buy -- your current rent is a good proxy.

Top marginal tax rate for your income - the higher your tax rate, the bigger the benefit of the mortgage interest and property tax deductions.

%

Top marginal state tax rate - the higher your tax rate, the bigger the benefit of the mortgage interest tax deduction.

For reference: tax-brackets.org

%

Closing costs (appraisals, loan origination fees, etc.) as a percent of the home price. This typically ranges 2-5%.

%

Yearly property taxes as a percent of home price. This varies between state and municipality, but is typically 1-3% of the home value.

%

Yearly homeowner's insurance as a percent of home price. This varies depending on home location (e.g., flood prone, etc.).

%

Yearly maintenance costs and upkeep (lawncare, plumbing, painting, etc.) per year as a percent of the home price. This is typically at least 1% of the home value.

%

Percent of sale price paid to the listing agents by the seller. Typically 6%.

About and Methodology

Results

Investment returns (IRR):
Value Levers:
Mortgage payments:
Pre-Sale Cash flow: