Appraisal Gap Calculator

• Break-even years tell you how long you need to stay in a home before buying beats renting.
• Cash-on-cash return above 8% is generally considered a strong rental deal in most U.S. markets.
• PMI usually drops off once you reach 20% equity — factor that into long-term costs.

1. 1Enter the home price and down payment.
2. 2Set your mortgage rate, term, taxes, insurance and HOA if applicable.
3. 3Adjust rental income or growth assumptions where relevant.
4. 4Compare monthly cost, break-even, and long-term equity.
5. 5Copy or share results to discuss with your lender or agent.

• First-time home buyers
• Rental-property investors
• Homeowners considering refinancing
• Renters running a rent-vs-buy analysis

• Before making an offer on a property
• When comparing rent vs buy in a new city
• Before refinancing an existing mortgage
• When evaluating a rental as an investment

• Home price and down payment
• Mortgage rate, term and PMI
• Property taxes, insurance and HOA fees
• Local appreciation and rent-growth assumptions

Illustrative examples using U.S. market averages. Enter your own numbers above for a personalized figure.

• Underestimating closing costs, insurance, and property taxes.
• Comparing rent to a mortgage payment only (ignore maintenance & opportunity cost).
• Assuming linear price growth over decades.

• Budget 1–2% of the home value per year for maintenance in addition to the mortgage.
• Don't forget PMI when the down payment is under 20%.
• Rerun the numbers with a realistic property-tax and insurance figure for your county.

• Full PITI breakdown including taxes, insurance, PMI and HOA.
• Rent-vs-buy and refinance scenarios calculated with real closing costs.
• Transparent formulas that match what your lender or agent will show.
• Works for primary homes, rentals and investment properties.

• Property taxes, insurance and HOA vary widely by county and building.
• Home appreciation is an assumption — past performance does not guarantee future results.
• Does not include closing costs, points or seller concessions unless entered.
• Not an appraisal, mortgage pre-approval or investment recommendation.

LTV (Loan-to-Value)

The mortgage amount divided by the appraised home value. LTV above 80% typically triggers PMI on conventional loans.

PMI (Private Mortgage Insurance)

A monthly premium required when your down payment is under 20% on a conventional loan. It usually drops off automatically once you reach 22% equity.

Closing costs

One-time fees paid at settlement — typically 2–5% of the purchase price for buyers (appraisal, title, taxes, origination).

Cap rate

Net operating income divided by property value. A common rental-property yield metric — 5–10% is typical in most U.S. markets.

Cash-on-cash return

Annual pre-tax cash flow divided by total cash invested. Measures the actual return on the money you put in.

• Get a pre-approval letter with the exact rate and lender fees itemized.
• Budget for closing costs (2–5% of price) and 6 months of housing reserves.
• Order an independent inspection — never rely on the seller's disclosure alone.
• Verify property tax, HOA, and insurance quotes with the actual providers, not estimates.

The formulas, rates and definitions used by this calculator are aligned with the following official sources:

• U.S. Department of Housing and Urban Development (HUD) — Affordability ratios, FHA loan limits and housing-cost benchmarks.
• Consumer Financial Protection Bureau — Owning a Home — Mortgage, closing-cost and rent-vs-buy guidance.
• RBI — Housing Loan Guidelines — Indian LTV caps and home-loan EMI norms.

We use only primary sources — regulators, standards bodies and scheme operators. See our full sourcing policy for details. Sources & References Policy · Calculator Methodology · How We Verify Formulas

We continuously review and improve our calculators to keep formulas, assumptions and references accurate.

In-depth real estate guides, worked examples, and expert explainers.

• Finance Calculators

  Mortgage, refinance, and amortization tools.

• Insurance Calculators

  Homeowners and life-insurance planning.

• Investment Calculators

  Compare a home purchase to investing the down payment.

• Save this appraisal gap calculator to compare scenarios later
• Browse more Real Estate calculators
• Read our guides for deeper explanations
• Contact us with questions or corrections