How to use the home carrying cost per month calculator
- Enter the home's value and the mortgage balance and rate. Enter 0 for the balance if the home is paid off.
- Enter the yearly property tax and insurance, and the monthly dues, utilities and upkeep.
- Enter the return you assume on the equity (value minus balance), or 0 to leave out that cost, and how many months you expect to hold the home.
- Read the monthly cost, the total for the months you chose and the table that shows each line.
Formula
interest per month = mortgage balance x yearly rate / 12
tax and insurance per month = yearly amount / 12
money tied up per month = (value - balance) x assumed return / 12
cost per month = sum of all the lines; total = cost per month x months
The part of a mortgage payment that repays principal is not a cost of holding the home, because it lowers what you owe. Equity is set to zero if the balance is more than the value.
A $450,000 home on the market for four months
The home is worth $450,000 and the mortgage balance is $280,000 at 6.5 percent. Mortgage interest is $1,516.67 a month. Property tax of $5,400 a year is $450.00 a month and insurance of $1,800 a year is $150.00. Dues are $150.00, utilities $220.00 and upkeep $200.00.
The equity is $170,000, and at an assumed 4 percent a year that is $566.67 a month of not having the money elsewhere. The total is $3,253.33 a month, of which $2,686.67 is cash. Over four months the cost of holding the home is $13,013.33.
Cash costs and the cost of tied-up money
The first six lines are bills you pay. The last line is different: it is what the money in the home could have earned somewhere else. It is not a payment, and the return you assume is a guess, so the page separates the cash costs in the statistics. Set the return to 0 to see only the bills.
Cash costs are the figure to compare with the rent you could collect. If you are weighing renting the home out against selling it, use the Sell vs Rent Out Home Calculator.
What the number leaves out
The page does not include the costs of selling, such as commissions and closing costs, nor repairs needed after an inspection, nor price changes while you wait. It also leaves out the tax effects of owning. To see the full monthly cost of living in a home you own, use the Home Ownership Cost Calculator, and for the tax line alone, see the Property Tax Calculator.
Assumptions and limits
- Mortgage interest is the balance times the rate divided by 12, so it does not change over the months you enter.
- Property tax and insurance are yearly amounts divided into twelve equal parts.
- The return on equity is an assumption, not a payment, and is shown separately from cash costs.
- Costs are the same each month for the period you choose, up to 120 months.
- Nothing typed here leaves your browser.
Frequently asked questions
Why is principal not counted as a cost?
Paying principal lowers your mortgage balance, so the money becomes equity you get back when you sell. Interest, tax, insurance and upkeep are gone once paid, which is why they count.
What return should I use on the equity?
Use what you could reasonably earn on that money in a safe place, or 0 to ignore it. It is an opportunity cost, so a rate you believe is realistic is better than a high one.
What if I owe more than the home is worth?
The equity is then treated as zero, so the equity line is zero. The mortgage interest line still uses the full balance.
Should I include furniture or moving costs?
Those are one-time costs, not monthly holding costs. Add them separately, or enter an average in the upkeep line if you want them spread over the months.