True Cost of Homeownership Calculator

Homeownership costs more than the mortgage payment. Maintenance is widely budgeted as a share of property value, commonly cited in the range of 1 to 2 percent a year, though that range is a budgeting convention rather than a measured average; insurance ratios vary by an order of magnitude with exposure, and property tax varies enormously by jurisdiction. This calculator takes all of them as cash figures rather than percentages, since that is what a bill states. At the sample figures used on this page (1,300 a month of mortgage plus 3,000 maintenance, 600 insurance and 2,000 property tax), the annual total is 21,200, of which 5,600 is non-mortgage: 26.4% of the total, or 35.9% added on top of the mortgage line alone. The Non-Mortgage Share row reports the first of those.

How the calculation works

The monthly mortgage figure is annualised by multiplying by twelve, the three annual figures are added to it, and that sum is the headline. Three derived rows follow from it: the monthly average divides the annual total by twelve, and the 10-year and 25-year projections multiply it by 10 and 25. The projections hold every input constant, so they are a straight-line reading of today's figures rather than a forecast. The Non-Mortgage Share row reports how much of the annual total comes from the three non-mortgage lines.

What moves the number most

At the sample figures the mortgage line carries 15,600 of the 21,200, or 73.6%, with maintenance at 14.2%, property tax at 9.4% and insurance at 2.8%. That ordering is a property of those particular figures, not of the calculation: a paid-off house with a high tax bill reverses it entirely. What is structural is the unit weighting.

Stress-testing the assumptions

Each annual input moves the total one for one: a unit added to maintenance, insurance or property tax adds exactly one unit to the year. The monthly mortgage payment moves it twelve times as far per unit entered, because it is annualised before summing, so a 10-unit change there is a 120-unit change to the total. Under a proportional change the ranking follows the size of each line instead, which is why the mortgage line dominates a 10% sweep at the sample figures. A rate change is modelled by entering the expected payment delta, since the tool sums fixed payments rather than interest rates.

Why one monthly line and three annual ones

The four inputs are entered on the bases on which people actually hold them: a mortgage payment is a monthly commitment, while maintenance, insurance and property tax arrive as yearly figures or are budgeted that way. The calculation reconciles them by annualising the monthly line, which is the only asymmetry in the model.

What this doesn't capture

The figure excludes inflation on maintenance, insurance, and property tax, all three of which usually drift upward over a long horizon while the projection holds today's figures. It also excludes the principal portion of the mortgage that builds equity rather than disappearing as cost, property appreciation or depreciation, the opportunity cost of the deposit, one-off costs such as surveys or renovation work, and any tax relief or allowances that apply locally. It also holds the mortgage running for the whole projection, which the FAQ below covers alongside the offsetting effect of inflation.