The question: If a buyer has the cash to purchase outright, should they? This calculator compares
paying all cash vs. financing and investing the freed-up capital. The answer depends on mortgage rate, investment
return, and how long they hold the property — not just the rate.
Property & Mortgage
Home Purchase Price
$
Down Payment / Cash Put Down In mortgage scenario
%
Mortgage Rate
%
Loan Term
yr
Home Appreciation Rate
%/yr
Investment & Horizon
Expected Investment Return On capital not used for home purchase
%/yr
Holding Period
years
Marginal Tax Bracket For after-tax return on investments
%
Annual Carrying Costs Taxes, insurance, HOA (both scenarios)
$
Scenario A — Pay All Cash
Cash Used at Closing$500,000
Monthly Cash Outflow$500
Total Cash Outflow Over Period$560,000
Home Value at End$740,122
Investment Account at End$0
Net Worth Position
$740,122
Scenario B — Finance + Invest Difference
Cash Used at Closing$100,000
Monthly Cash Outflow (P&I + carrying)$3,155
Total Cash Outflow Over Period$479,000
Home Value at End$740,122
Investment Account at End$750,000
Remaining Mortgage Balance($310,000)
Net Worth Position
$1,180,122
Mortgage + Invest wins by:
At a 7.00% mortgage rate with a 7.00% investment return over 10 years, financing and investing the difference builds more wealth. The mortgage interest is the cost of keeping capital deployed.
+$440,000
net worth advantage
Monthly Cash Flow Comparison
Monthly outflow — Cash scenario (carrying costs only)
$
500
Monthly outflow — Mortgage scenario (P&I + carrying)
$
3,155
Additional monthly cost of financing
$
2,655
Mortgage P&I payment
$
2,655
Loan amount financed
$
400,000