II. Housing · Calculator

Buying a home: what you’d need to sell it for to break even

Buying and selling a home both cost money, and so does owning one in between. See how much higher the sale price has to be just to get your money back.

Why you can’t sell for what you paid

Buying and selling a home each come with large one-time costs. They’re paid at closing, and you never get them back:

• When you buy: lender fees, appraisal, title insurance, inspections, recording fees and prepaid items. These are often around 2–5% of the price. Your Loan Estimate lists them.
• When you sell: real estate agent commissions are usually the biggest cost, often around 5–6% in total, and they’re negotiable. Add transfer taxes, title and escrow fees, and any repairs or credits to the buyer.

Together, that’s often 8–10% of the home’s value. So if you buy for $400,000 and sell soon after for $400,000, you don’t break even. You lose tens of thousands of dollars. The home has to rise in value enough to cover both sets of costs first.

The costs of owning it in between

Your mortgage payment is only part of what owning costs. Every month you’ll also pay for:

• Property tax, usually charged as a percentage of the home’s assessed value. It varies widely between states and towns.
• Homeowners insurance, which your lender will require.
• HOA or condo fees, if the home has them.
• Maintenance and repairs. A common rule of thumb is to budget about 1% of the home’s value a year. Older homes often need more.
• Private mortgage insurance (PMI), usually required on a conventional loan when you put down less than 20%. On many loans it can be removed once you’ve paid down enough of the loan.

Part of each mortgage payment pays down the loan (principal), and you get that back as equity when you sell. The rest (interest, taxes, insurance, fees and upkeep) is spent, much like rent.

So is buying a bad deal?

Not necessarily. Renting costs money too, and none of it comes back. The fair comparison is between what owning costs you after selling and what renting a similar home would cost over the same years.

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The biggest factor is usually how long you stay. The buying and selling costs are paid once, so the longer you own, the more years they’re spread across, and the more time the home has to rise in value. Buying for a short stay is where people most often lose money.

What this calculator assumes

• The home’s value changes by the same percentage every year. Real prices can fall, sometimes for years.
• Property tax and maintenance are based on the home’s current value each year. In many places, assessments lag behind market value or are capped.
• PMI is charged until the loan balance falls below 80% of the purchase price.
• Not included: income tax effects (such as the mortgage interest deduction, or capital gains tax on a sale, which many homeowners don’t owe; see IRS Publication 523), moving costs, furnishing, or what the down payment could have earned if invested instead.

Do this today

• Put in real numbers: your area’s property tax rate, an insurance quote and any HOA fees.
• Be honest about how many years you expect to stay, and try a shorter stay to see the risk.
• Try a home value growth of 0% to see what happens if prices stay flat.
• If you’re close to buying, ask lenders for Loan Estimates and compare the closing costs line by line.
• Ask agents what commission they charge. It’s negotiable.

Sources

• Consumer Financial Protection Bureau: Owning a home (tools and guides for buyers)
• CFPB: What fees or charges are paid when closing on a mortgage, and who pays them?
• CFPB: Understanding your Loan Estimate
• CFPB: What is private mortgage insurance?
• IRS Publication 523: Selling your home (tax on the sale)
• HUD: Buying a home

This calculator is for education, not financial, tax or legal advice. Real costs depend on your state, lender, home and market, and home prices can fall. Before buying, get actual quotes and consider talking to a HUD-approved housing counselor, which is often free.