The full cost of buying a home
A listing price is only the start. Buying means paying a down payment and closing costs up front, then principal and interest, property taxes, insurance and often mortgage insurance every month. This tool adds all of it up for a specific price and ZIP code, using that state’s closing-cost taxes and the local property tax rate.
What it includes
Up front: your down payment and estimated closing costs, including the transfer, recording or mortgage taxes buyers pay in that state. Monthly: principal and interest at today’s average rate, property tax at the town or county rate, insurance and mortgage insurance for your loan type. For FHA loans it adds the upfront premium to the loan and the annual premium from HUD’s table; for VA loans it adds the funding fee.
Cost versus equity
Part of every payment reduces your loan balance, which you keep as equity. So the tool shows two numbers for the years you plan to stay: the cost of owning (closing costs, interest, mortgage insurance, taxes and insurance) and the equity you’d build from your down payment and principal payments, before any change in the home’s value.
An example
On a $550,000 home with 10% down on a conventional loan, the tool shows the cash you’d need at closing, a monthly payment including local taxes and PMI, and how much of five years of payments goes to interest versus paying down the loan.
What it leaves out
- Maintenance and repairs, often estimated at around 1% of the home’s value a year.
- HOA dues, utilities and moving costs.
- Changes in the home’s value, which can add to or reduce your equity.
Using the result
Compare the cash-to-buy figure with your savings, leaving room for moving costs and an emergency fund. Then compare the monthly figure with what you pay in rent today and with the affordability calculator’s comfortable budget. If the numbers are tight, try a lower price, a larger down payment or a different loan type, and see how each changes both the upfront cash and the monthly cost.
Questions buyers ask
How much cash do I need to buy a house?
Your down payment plus closing costs, which often run 2% to 5% of the price. The tool estimates both for your ZIP code.
Is renting cheaper than the cost of owning?
Compare this tool’s cost of owning with what you’d pay in rent over the same years, or use the rent vs. buy calculator.
Why is FHA’s loan amount higher?
FHA adds a 1.75% upfront mortgage insurance premium, which is usually financed into the loan.