How the Real Estate Calculator Works
Buying or selling a home involves many more numbers than the price. The Real Estate Calculator adds them up for you. It has two modes: one for a buyer, who wants to know what owning the home will really cost, and one for a seller, who wants to know how much money will be left after the sale.
Mode 1: buying a home
You enter the home price, the down payment, the mortgage rate and term, and the running costs. The calculator then works out each monthly cost:
- Principal and interest: the loan payment, from the standard formula below.
- Property tax: the price times the tax rate, divided by 12.
- Home insurance: the yearly cost divided by 12.
- Mortgage insurance (PMI): added only if you put down less than 20%. It is a percentage of the loan each year, and it ends when you owe 80% or less of the price.
- HOA fee: the monthly fee, if the home has one.
- Maintenance: a set-aside for repairs, usually about 1% of the price each year.
payment = P x r x (1 + r)^n / ((1 + r)^n - 1) P = loan amount, r = monthly rate (yearly rate / 12), n = number of months
The calculator also shows the cash you need at closing (the down payment plus closing costs), the total interest over the life of the loan, and the yearly income lenders may want. That last figure uses the 28% rule: the loan payment, tax, insurance, PMI and HOA fee together should stay under 28% of your income before tax. Maintenance is not counted by lenders, so it is left out of that figure.
A worked example: buying
You buy a $400,000 home with 20% down and a 6.5% mortgage over 30 years. Property tax is 1.1% of the price, insurance is $1,600 a year and you set aside 1% a year for maintenance.
| Item | Per month |
|---|---|
| Principal and interest on $320,000 | $2,022.62 |
| Property tax | $366.67 |
| Home insurance | $133.33 |
| Maintenance set-aside | $333.33 |
| Total | $2,855.95 |
You need $92,000 in cash at closing (the $80,000 down payment and 3% closing costs), and about $108,112 of income a year to pass the 28% rule. With only 5% down, mortgage insurance adds about $222 a month for 10 years and 4 months, and the total rises to $3,457.
Chart: where each month goes
The same example. Each bar is one part of the $2,855.95 monthly cost:
Loan payment ████████████████████████████████████████ 71% Property tax ███████ 13% Insurance ███ 5% Maintenance ███████ 12%
Mode 2: selling a home
You enter the sale price, the mortgage you must pay off, the agent commission, other selling costs (such as title fees and transfer taxes), and any repairs or credits you give the buyer. The money you keep is:
cash to you = sale price - mortgage payoff - commission - other costs - repairs
If you also enter what you paid and the improvements you made, the calculator shows your gain before tax. If the result is negative, the sale would not cover the loan and the costs, and you would need to bring money to closing.
A worked example: selling
You sell for $400,000. You still owe $220,000. The agent takes 5%, other costs are 1.5% and you spend $3,000 on repairs.
| Item | Amount |
|---|---|
| Sale price | $400,000 |
| Mortgage payoff | -$220,000 |
| Agent commission (5%) | -$20,000 |
| Other selling costs (1.5%) | -$6,000 |
| Repairs | -$3,000 |
| Cash to you | $151,000 |
Chart: where the sale price goes
Mortgage payoff ████████████████████████████████████████ 55% Commission ████ 5% Other costs █ 1.5% Repairs █ 0.8% Cash to you ███████████████████████████ 38%
Good to know
- A down payment of 20% or more avoids PMI, but it also needs more cash up front.
- Property tax rates and insurance costs differ a lot from place to place. Use the real numbers for your area.
- Sellers often owe tax on a gain. Rules and exclusions depend on your country and situation, so the calculator shows the gain only before tax.
- Set aside money for maintenance even when you do not spend it every month. A big repair costs far more than a small one each year.
What this calculator does not include
- Income tax, capital gains tax and other taxes on a sale.
- Moving costs, points paid for a lower rate, and appraisal or inspection fees beyond the closing-cost percentage.
- Changes in the mortgage rate, property tax or insurance over time.
This tool gives an estimate for general information only. It is not financial, tax or legal advice. Ask your lender and agent for exact figures.