Rent To Ownership Comparison

The following chart takes your current rent payment and equates it to a before-tax house payment and the corresponding sales price. For example, if you are paying $1,200 per month in rent, that is the equivalent of a before-tax house payment of $1,720 per month, which would be sufficient to purchase a $181,000 home. In other words, the tax savings from mortgage interest and property tax deductions that you would realize each year would reduce your monthly house payment of $1,720 to a net after-tax payment of $1,200. Consequently, if you can afford a $1,200 per month rent payment, it's the same as a monthly before-tax house payment of $1,720 on a $181,000 home.

Current Rent	Equivalent Before Tax House Payment (includes principal, interest, taxes & insurance)	Sales Price
$700	$1,005	$105,800
800	1,150	121,000
900	1,290	136,000
1,000	1,435	151,000
1,100	1,580	166,000
1,200	1,720	181,000
1,300	1,865	196,000
1,400	2,010	211,500
1,500	2,150	226,000
1,600	2,295	241,500
1,700	2,440	257,000
1,800	2,580	271,500
1,900	2,725	287,000
2,000	2,870	302,000
2,100	3,010	317,000
2,200	3,160	332,500
2,300	3,300	347,000
2,400	3,440	362,000
2,500	3,590	378,000

Note: The above table is based on a 20% downpayment loan at 12-1/2% amortized for 25 years; an 80% first mortgage at 8-1/2% amortized for 30 years; property taxes at 1-1/4% of the sales price, and insurance based on price range premium tables. The combined state and federal tax bracket is assumed to be 33%.

The mortgage financing described herein is available for properties located in California only.

Designed, hosted and maintained for The Downpayment Company by

...when it's time to establish an Internet presence.