Finance vs. Pay Cash Calculator — Should You Finance or Buy Cash?
See the true cost of financing a home vs. buying it outright — including what your money could have earned if it were invested instead.
Results
Total Cost Comparison
Invested Capital Over Time
Both options assume you own the home. The invested-capital chart shows how much money each path leaves invested at the end of the loan term.
Compare Scenarios
Save different combinations of inputs and view them side by side.
Should You Finance or Pay Cash for a Home?
Paying cash avoids decades of interest, but it ties up a large lump sum that could otherwise be invested. Financing keeps your capital working — the question is whether your investment return beats your mortgage rate. If it does, financing can leave you with more money at the end of the term, even after paying all the interest.
How the Opportunity Cost Changes the Answer
When you buy in cash, you forgo the growth that the purchase price would have earned in the market. With financing, you only tie up the down payment and keep the rest invested, while making monthly payments. This calculator models both paths: it grows the financed amount as an investment and also grows what you would have saved each month had you paid cash, then compares the two end-of-term balances.
Frequently Asked Questions
Is it better to finance a home or pay cash?
It depends on the mortgage rate and your expected investment return. If you can earn more investing the money than you pay in mortgage interest, financing can leave you richer over the long term. If the mortgage rate is higher than your investment return, paying cash usually wins.
How do you compare financing vs. paying cash?
Compare the effective cost of both options. With financing, you pay a down payment plus monthly payments, and the rest of the purchase price stays invested. With cash, you pay the full price today and give up the growth that money could have earned. This calculator models both paths side by side.
What is the opportunity cost of paying cash?
The opportunity cost is the return you could have earned by investing the purchase price instead of tying it up in the home. If your investments grow at 8% per year, every year you leave that capital in the house is a year it is not compounding.