Your mortgage payment is the smallest honest number about owning a home. The real cost is a stack — PITI plus maintenance plus opportunity cost plus the transaction tax on both ends — and buyers who only look at the payment are pricing the wrong thing.
The layers, cheapest to biggest
- Principal & interest. The mortgage payment you see quoted. Early years are almost entirely interest.
- Property tax. 0.5–2.5% of home value per year depending on state. On a $400k home: $2k–$10k a year.
- Homeowners insurance. $1k–$3k a year in most markets; more on the coasts and in fire zones.
- HOA / condo fees. $200–$800 a month in many metros. This one is a payment-sized line item hiding in plain sight.
- Maintenance & repairs. Plan on 1–2% of home value a year. Roof, HVAC, water heater, plumbing, paint. Lumpy but real.
- Opportunity cost on the down payment. Money in equity isn’t earning market returns. At 7% real, every $10k of equity is ~$700/year of foregone return.
- Transaction costs on exit. Selling typically costs 8–10% of price. Appreciation has to clear that hurdle before you profit.
A concrete example
$400k house, $80k down, $320k mortgage at 7%. The P&I is ~$2,130/mo. Add $500 tax, $150 insurance, $100 HOA, $500 maintenance (1.5% annualized), and the real monthly cost sits around $3,380. That’s before you count the $5,600/year opportunity cost on your down payment — another $467/mo that never shows up on a bank statement but is absolutely real.
Why this matters for rent-vs-buy
The classic mistake is comparing a $2,500 rent to a $2,130 mortgage and concluding the house is cheaper. It’s not. Once the stack is complete, the real comparison is $2,500 rent vs ~$3,850 all-in ownership — and the decision turns on how long you’ll hold, whether the home appreciates, and what the alternative investment earns.
Year-by-year simulation that invests the difference and includes opportunity cost. The only honest comparison.