Buy a New Home vs. Stay Put
Compare the long-term financial impact of selling your current home to buy a new one versus staying where you are.
How this works
Balances and investments compound at the nominal annual return you enter (default 7%) — this calculator does not deflate for inflation. Recurring costs (home insurance, HOA fees) escalate using the inflation input (default 2.5%), while home price, rent, and income use their own separate growth-rate inputs. Every dollar figure reported is a future, nominal dollar amount, not today's purchasing power — unlike the FI-focused calculators elsewhere in this suite.
Compares staying in your current home against selling it to buy a new one. Sale proceeds (net of selling costs and the remaining mortgage) fund the new down payment; any leftover cash, or shortfall, gets invested or contributed on day one.
Each month the cheaper scenario's cash advantage is invested at your chosen investment return, and net worth is equity plus these accumulated investments.
Key assumptions
- The tax model is itemization-aware for 2026 (OBBBA-era figures): standard deduction $16,100 single / $32,200 married filing jointly, a $40,400 SALT cap (shared between estimated state/local income tax and property tax), and a $750,000 mortgage-interest debt cap. Only the federal marginal rate is applied to the incremental itemized deduction.
- Unlike Rent vs. Buy, the `grossIncome` used to estimate state/local income tax for the SALT bucket is a flat figure held constant for the entire 30-year projection — this calculator has no income-growth model.
- PMI on the new home applies whenever the down payment is under 20% of the new home price, at a default 0.5%/yr rate on the original loan amount.
- Default selling costs 7% of current home value; default buy-side closing costs 3% of new home price.
What this leaves out
- Sequence-of-returns risk — growth is a constant rate, not a real market path.
- Fees — expense ratios and advisory fees are not deducted from the return.
- The SALT cap's income-based phase-down above $505,000 MAGI (2026) is not modeled — the cap applies flat regardless of income.
- All 2026 tax constants (standard deduction, SALT cap, mortgage-interest cap) are frozen for the full 30-year projection, even though the SALT cap is scheduled to revert to $10,000 in 2030 under current law.
Related calculators
A worked example: trading a 3.5% mortgage for a 6.5% one
A household owns a $500,000 home with $250,000 left on a 3.5% mortgage and 15 years to run. They are considering a $750,000 home at 6.5% over 30 years with $150,000 down, and expect to stay ten years. Home prices grow 4% a year and investments return 7%.
Start with the cash. Selling at $500,000 with 7% selling costs gives up $35,000, leaving $215,000 of proceeds after the existing loan is cleared. Buying costs $22,500 in closing costs at 3% of the new price, plus $5,000 of moving costs and the $150,000 down payment. That leaves $37,500 in hand, so the move is fully funded by the sale with cash to spare. Note also that $150,000 on $750,000 is exactly 20% down, so loan-to-value lands at 80% and no PMI is charged — a dollar less would trigger it.
The monthly picture is where the decision lives. In year one the modeled cost of staying is $2,894.69 a month against $5,090.64 to buy, a difference of $2,195.95 that the model invests for whichever side is cheaper. Ten years on, the stayer has $395,663 invested and a loan paid down to $98,243, for a net worth of $990,657 after selling costs. The buyer's home is worth $1,118,125 against a $508,657 balance — more equity in absolute terms is not what happens here, in fact slightly less at $609,468 — and only $75,362 invested, for $606,561.
Staying wins by $384,096 over ten years, and the calculator reports no breakeven year within the horizon. The larger home does appreciate on a bigger base, but not fast enough to overcome $57,500 of transaction costs, a tripled interest rate, and ten years of compounding on roughly $2,200 a month that the stayer never had to spend. Change the stay duration, the price growth, or the rate gap and the answer can move — which is the point of running your own numbers.
Frequently asked questions
Why does giving up a low mortgage rate cost so much?
Because a fixed-rate mortgage is an asset, not just a liability — it is the right to borrow at a rate that may no longer be available. In the example above the household moves from 3.5% to 6.5%, and the monthly cost of housing rises by $2,195.95 even though the home is only 50% more expensive. Part of that is the larger loan and part is the rate, and the rate portion buys nothing. This is the mechanism behind the lock-in effect that has held transaction volumes down across much of the market.
My sale covers the new down payment. Does that mean I can afford the move?
No — those are different questions, and conflating them is the most common error here. The example clears $37,500 after funding the down payment, closing and moving costs, which says the transaction is fundable. Affordability is the monthly figure: $5,090.64 against $2,894.69, an extra $2,195.95 every month for as long as you hold the loan. Cash at closing is a one-time hurdle; the payment is the commitment.
How much do selling and buying costs actually take?
In this example, $35,000 to sell at 7% of the current value and $22,500 to buy at 3% of the new price — $57,500 of pure transaction cost, plus $5,000 of moving. That is roughly 11.5% of the current home's value consumed by the act of moving, and none of it buys housing or builds equity. It is why frequent moving is expensive regardless of what happens to prices, and why a short expected stay in the new home is hard to justify.
The new home appreciates on a bigger base. Why doesn't that win?
It helps, but it is competing against three things at once. Over ten years the new home grows from $750,000 to $1,118,125 while the current one reaches $745,416 — a much larger absolute gain. Against that sits $57,500 of transaction costs paid up front, a loan that amortizes far more slowly at 6.5% over 30 years than the existing one does at 3.5% with 15 years left, and the roughly $2,200 a month the stayer invests instead. By year ten the stayer holds $395,663 in investments against the buyer's $75,362, and that gap is what decides it.
Does the mortgage interest deduction offset the higher payment?
Partly, and less than most people assume. The model is itemization-aware using currently-enacted 2026 figures under the One Big Beautiful Bill Act (Pub. L. 119-21): a $16,100 single or $32,200 married standard deduction, a $40,400 SALT cap shared between estimated state and local income tax and property tax, and a $750,000 mortgage-interest debt cap. Only deductions above the standard deduction produce any benefit, and only the federal marginal rate is applied to the incremental amount. A $600,000 loan sits under the debt cap, so its interest is deductible in principle — but with state and local income tax often consuming the SALT bucket before property tax counts, the benefit is well below the headline rate on interest.
Are these figures in today's dollars?
No. Like Rent vs. Buy and unlike the FI calculators here, this one reports nominal future dollars. Home values grow at their own input rate, recurring costs escalate with inflation, and investments compound at the nominal return you enter. The $1,118,125 home value is a future dollar figure, not today's purchasing power. This is deliberate: a fixed mortgage payment does not move with inflation, so modeling the comparison nominally keeps it internally consistent.
Sources
- Revenue Procedure 2025-32
Internal Revenue Service — checked 2026-08-12
Source of the 2026 standard deduction, SALT cap, and mortgage-interest debt cap figures used in the tax model. §.14 gives the 2026 standard deduction as $16,100 (single/MFS), $32,200 (MFJ), and $24,150 (HoH).
- Publication 936: Home Mortgage Interest Deduction
Internal Revenue Service — checked 2026-08-12
Pub. 936 prescribes the AVERAGE mortgage balance for the qualified-loan-limit calculation. This site uses the START-OF-YEAR balance instead (see docs/methodology.md, 'Known simplifications') — a documented, conservative deviation, cited here precisely because we diverge from it, not because we comply with it.
- One Big Beautiful Bill Act, Pub. L. 119-21
U.S. Congress — checked 2026-08-12
Statutory basis for the 2026 tax constants (standard deduction indexing, SALT cap, mortgage-interest debt cap).
*The calculations provided are for illustrative purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any decisions.