Compare assumptions before comparing homes
The home-buying workflow connects an affordability estimate, down-payment calculation, mortgage and rent-versus-buy comparison. The affordability estimate is not loan approval. Later choices can differ from earlier estimates; the report preserves both and warns about conflicting assumptions.
What crosses from one step to the next
The down-payment step passes a dollar amount to the mortgage and a percentage to rent versus buy. The selected loan term and annual interest rate are retained. Property tax and home insurance are annual dollar amounts; HOA and extra principal are monthly amounts. Empty optional mortgage costs are explicitly transferred as zero, so an old charge does not silently remain.
Monthly payment is not total housing cost
Principal and interest repay the loan. Enter property tax, home insurance and applicable association charges separately. Loan fees, mortgage insurance, taxes on investment gains and tax deductions are excluded from this model; they are not assumed to be absent in real life. The CFPB's affordability guidance explains why the total monthly payment matters.
How the rent-versus-buy model compares wealth
The owner uses the down payment plus buying costs up front. The renter invests the same amount. Each month, the option with the lower modeled cash outflow invests the difference. Mortgage payments stop when the balance is repaid. At the horizon, owner wealth includes sale proceeds after selling costs, outstanding debt and the owner's investment balance. Renter wealth is the renter's investment balance.
All amounts are nominal dollars. Investment growth, appreciation and rent growth are hypothetical constant annual effective rates. Tax, insurance and HOA dollar inputs stay flat; maintenance follows the current home value. Annual cash flows are not tax returns. Investment contributions occur at month end. Market volatility, liquidity, transaction timing and local charges can change a real decision.
A deliberately simple example
A synthetic $1,200 home financed for one year at zero interest, zero down payment and no other modeled costs requires $100 monthly principal. Compare $100 monthly rent and zero growth. At month 12, the owner has $1,200 of home equity and the renter has no portfolio from cash-flow differences. This identity tests the model; it is not a realistic price or recommendation.
Use scenarios as questions
Change the term, transaction costs, rent, return or maintenance assumption, then save a named scenario. Select two or three scenarios and inspect inputs and formula versions before comparing outputs. A higher modeled terminal value does not establish what is affordable or appropriate for you. Load and recalculate historical versions before treating them as current.
Evidence and review limits · Open the comparison · Keep or export local work