DwellQ Learn

Net Worth

The single number DwellQ uses to compare renting vs. buying. For renters, it’s the value of your investment portfolio. For buyers, it’s your home value minus the remaining loan balance (equity), plus any remaining investments. Higher net worth = better outcome.

Down Payment

The cash you pay upfront — usually 5–20% of the home price. Less than 20% triggers PMI (an extra monthly fee). This is also your biggest opportunity cost — as a renter, this money would be invested in the stock market instead.

Equity

The portion of the home you actually own. It starts with your down payment and grows as you pay down the mortgage and as the home appreciates. Equity = Home Value minus Remaining Loan Balance.

Break-Even Point

The year when the two paths cross — the buying path’s net worth overtakes the renting path’s. Before this point, renting + investing your down payment is projected to build more wealth. After it, buying is projected ahead. This is the crossover on DwellQ’s main chart.

Time Horizon

How many years you plan to stay. This is the single most important input in the calculator. Shorter stays (1–4 years) strongly favor renting because closing and selling costs haven’t been recouped. Longer stays (7+ years) strongly favor buying as equity and appreciation compound.

PITI

Principal, Interest, Taxes, and Insurance — the four components of your total monthly housing payment as a buyer. When someone says “my mortgage is $3,200/mo,” they usually mean just principal + interest. PITI is the real number.

PMI

Private Mortgage Insurance — a monthly fee (typically 0.3–1.5% of the loan annually) charged when your down payment is less than 20%. Protects the lender, not you. It drops off automatically once you reach 80% loan-to-value ratio.

LTV (Loan-to-Value)

The ratio of your mortgage balance to your home’s value, expressed as a percentage. If you put 10% down on a $500K home, your LTV is 90%. Lenders use LTV to assess risk — below 80% means no PMI, and below 78% triggers automatic PMI removal.

HOA

Homeowners Association fee — a monthly charge for shared amenities and maintenance in condos, co-ops, and some planned communities. Can range from $100 to $2,000+/mo. This is a carrying cost that never builds equity.

Property Tax

An annual tax assessed by your local government based on your home’s value. Rates vary widely: 0.3% in Hawaii to 2.2%+ in Texas. It’s part of PITI and often the biggest cost buyers underestimate.

Amortization

How your mortgage payment splits between principal (builds equity) and interest (gone forever). Early on, ~80% of your payment is interest. Over time, more goes to principal. This is why the first years of a mortgage feel expensive relative to the equity you build.

Appreciation

How much the home’s value grows each year. The national average is about 3–4%/yr, but it varies widely by market. A home appreciating at 3%/yr goes from $500K to $670K in 10 years. DwellQ lets you adjust this assumption.

Investment Return

The annual return your money earns in the stock market as a renter. DwellQ defaults to 7% (the S&P 500 historical average, inflation-adjusted). This is applied to your down payment and the monthly savings gap between renting and buying.

Closing Costs

One-time fees at purchase: appraisal, title insurance, attorney, lender fees. Typically 2–5% of the home price, paid on the day you sign. Not part of your loan — you pay these out of pocket on top of your down payment.

Selling Costs

Fees you pay when you sell the home — typically 5–7% of the sale price. Includes agent commissions, transfer taxes, and closing fees. On a $500K home, that’s $25K–$35K. This is the exit fee that extends your break-even timeline.

Capital Gains Tax

Tax on profit when you sell an asset. For your home, the first $250K of profit ($500K if married) is excluded. For investments, long-term gains are taxed at 0–20% depending on income. DwellQ models this for both renters and buyers at exit.

DTI Ratio

Debt-to-Income — what percentage of your gross monthly income goes to debt payments (mortgage, car, student loans). Lenders want this under 36–43%. DwellQ shows this in the affordability check on the Overview tab.

SALT Cap

State and Local Tax deduction cap — a federal limit on how much you can deduct for state income tax + property tax combined. Currently $40,000 (2025). If your state taxes + property taxes exceed this, you lose the excess. Q+ models this precisely.

ARM

Adjustable Rate Mortgage — a loan that starts with a lower fixed rate (e.g. 5.5% for 5 years) then resets to a higher rate based on market conditions. The initial savings are real, but future payments are uncertain. Q+ models rate caps, resets, and worst-case scenarios.

Refinancing

Replacing your existing mortgage with a new one — usually to get a lower rate, switch from ARM to fixed, or pull out equity (cash-out refi). Comes with new closing costs, so it only makes sense if the savings exceed the cost. Q+ calculates the exact break-even month.

Itemizing vs. Standard Deduction

You get the larger of two tax breaks: the standard deduction ($15,750 single / $31,500 married, 2025 — adjusted annually for inflation) or the total of your itemized deductions (mortgage interest + property tax + state tax, subject to SALT cap). Many buyers don’t actually benefit from itemizing. Q+ calculates which option wins for you.

Discount Points

An upfront fee you pay to lower your mortgage rate. One point = 1% of the loan amount and typically reduces the rate by ~0.25%. On a $400K loan, one point costs $4,000 but saves ~$60/mo. Q+ models whether the upfront cost is worth the long-term savings.

Opportunity Cost

What your money could have earned elsewhere. When you put $100K into a down payment, that’s $100K that isn’t invested in the stock market. DwellQ’s core insight is modeling this tradeoff — it’s the reason renting sometimes wins even when your mortgage payment is similar to rent.

Escrow

An account held by your lender that collects a portion of property taxes and homeowners insurance with each mortgage payment. The lender pays these bills on your behalf when they come due. Most conventional loans require escrow if your down payment is under 20%.

Pre-Approval

A lender’s conditional commitment to lend you a specific amount based on your credit, income, and debts. It’s the first step most buyers take and sets your realistic budget. A pre-approval letter also signals to sellers that you’re a serious buyer.

Fixed-Rate Mortgage

A loan where the interest rate stays the same for the entire term (typically 15 or 30 years). Your principal and interest payment never changes. It’s the most common loan type in the US and offers payment predictability, though initial rates are usually higher than ARM rates.

Home Insurance

An annual policy that covers damage to your home (fire, storms, theft) and liability if someone is injured on your property. It’s part of PITI and typically costs 0.25–0.50% of the home’s value per year. Lenders require it as long as you have a mortgage.

Maintenance Reserve

The ongoing cost of keeping a home in good condition — roof repairs, HVAC servicing, plumbing, appliances. A common rule of thumb is 1–2% of the home’s value per year. On a $500K home, that’s $5K–$10K/yr. This carrying cost is one reason buying is more expensive than the mortgage payment alone.