How Homeownership (and an Extra $100,000 in Home Price) Can Pay You Back

Owning a home is about more than having a place to live. Over time, it can become one of the most powerful tools for building long-term wealth—especially in a market like San Diego.

One advantage that often gets overlooked is the tax benefit of mortgage interest. To make this real, let’s look at what happens when you buy just $100,000 more home than you originally planned.

The Basic Assumptions

For this example, we’ll assume:

  • You purchase a home that’s $100,000 higher in price than your baseline scenario.
  • You finance that extra $100,000 with a 30-year fixed mortgage.
  • The interest rate on that portion is 6.5%.
  • You’re in a 24% federal income tax bracket.
  • You itemize deductions so that mortgage interest is deductible.

We’re focusing only on the additional $100,000 portion here, not the entire loan.

Year 1: Interest and Tax Savings on the Extra $100,000

On a 30-year mortgage at 6.5%, the interest portion in the first year on a $100,000 balance is approximately $6,455.

If you can deduct that interest, and you’re in a 24% federal tax bracket, the tax savings from this portion alone look like this:

  • Interest paid (Year 1) on extra $100,000: ≈ $6,455
  • Tax rate: 24%
  • Estimated tax savings: $6,455 × 0.24 ≈ $1,549

So in the first year, the extra $100,000 in home price could generate around $1,549 in tax savings—just from the interest deduction on that portion of the loan.

Over Time: How It Adds Up

In the early years of a 30-year mortgage, a larger share of your payment goes toward interest. As the loan ages, the interest portion gradually decreases while the principal portion increases. That means your tax savings start higher and taper off over time.

If we take a simple view and look at the first 12 years, where the interest portion is still relatively high, it’s reasonable to estimate an average annual tax savings on the extra $100,000 of around $1,500–$1,600 per year, given the assumptions above.

Using a conservative average of about $1,549 per year, over 12 years that’s:

  • $1,549 × 12 years ≈ $18,588 in tax savings

That’s where the “about $18,000 in tax benefits” comes from—just on the additional $100,000 of home price, and just from the federal mortgage interest deduction in this example.

And That’s Only Part of the Story

The tax benefit is one piece of the long-term picture. When you own a home, you also benefit from:

  • Principal paydown: Every payment chips away at the loan balance and builds your equity.
  • Potential appreciation: San Diego has historically seen strong long-term appreciation, though it can move up and down in the short term.
  • Protection from rising rents: A fixed-rate mortgage means your principal and interest payment stays predictable over time, even if rents climb.
  • Control over your space: Improvements you make can increase both your enjoyment and your home’s future resale value.

When you add these benefits together—tax savings, equity growth, and potential appreciation—it’s easier to see why many families view homeownership as a cornerstone of their long-term financial plan.

Should You Stretch for a Little More Home?

That doesn’t mean everyone should automatically spend $100,000 more. The right decision depends on your income, your comfort level with the monthly payment, your job stability, and your broader financial goals.

However, this example shows that, for some buyers, going slightly higher in price to get the right home, neighborhood, or features can have meaningful long-term financial benefits beyond what’s obvious from the monthly payment alone.

Want a Personalized Breakdown?

If you’d like to see what the numbers might look like in your situation—based on your income, price range, and the part of San Diego you’re targeting—I’m happy to walk through it with you.

You can call or text me at 858-252-1290, or reach out through the Contact page on this site. I’ll help you compare scenarios so you can make a confident, informed decision.

If you found this helpful, please feel free to share this page with anyone you know who’s trying to decide whether now is the right time to buy or move up.

Disclaimer: This example is for illustration only and is not tax, financial, or legal advice. Actual tax benefits depend on your full financial picture, state and local tax rules, and whether you itemize deductions. Always consult with a qualified tax professional or financial advisor about your specific situation.