Method, conventions and sources
Every amount shown by the calculator comes from a formula stated below. Where a figure rests on a hypothesis rather than a statistic, the page says so.
Two totals, never merged
The calculator separates what leaves your account from what the operation costs you in value. Adding them without distinction would count as an expense sums that are never paid.
Paid out
Capital, interest, property tax and insurance. These amounts are actually paid during the loan.
Not paid out
Monetary erosion, wear of the building and resale risk. They are not paid in cash; they measure value given up or exposed over the term.
Formulas
B capital · t monthly rate · n months · a years · T known annual tax · P property value · τ property tax rate · α insurance rate · π inflation · G guarantee value · d wear rate · r resale discount.
| Item | Formula | Convention and limit |
|---|---|---|
| Monthly payment (M) | M = B·t / (1 − (1 + t)^−n) | Constant-payment amortisation, the standard for fixed-rate loans. At zero rate, M = B / n. |
| Interest (i) | i = M·n − B | Total interest over the term, derived from the payment schedule. |
| Property tax (I) | I = T·a | I = P·τ·a | If you enter your actual annual tax, it is used. Otherwise the rate is applied to the property value: an approximation, since the legal base (in France, the cadastral rental value) is not known to most borrowers. The amount is held constant over the term. |
| Insurance (A) | A = B·α·a | Annual rate on the initial capital, as in many group contracts. Contracts priced on the outstanding capital cost less. |
| Monetary erosion (E) | E = B·(1 − (1 + π)^−a) | Loss of purchasing power of the sum borrowed over the term, compounded. By construction it can never exceed B. |
| Wear (D) | D = min(G, G·d·a) | Physical wear of the building. It is a hypothesis, not a forecast of market prices, which may rise at the same time. Capped at the guarantee value. |
| Resale risk (R) | R = (B + i)·r | Discount accepted in a forced or early sale. Hypothesis set at 10% by default, adjustable. |
In which direction erosion is counted
From the borrower’s cash flow alone, inflation lightens fixed payments: each instalment is paid in money worth a little less. The calculator does not ignore this, which is why E never appears in the total paid out.
E measures something else: the value that the monetary counterparty committed to the operation loses over the term. It belongs to the economic total. Both readings are shown side by side, and each answers a different question.
Why the default inflation rate is 2%
A loan runs for fifteen to twenty-five years. Projecting last year’s figure over such a span would make the result depend on a single year. The default rate is therefore the central bank’s medium- or long-term target; the latest observed figures are listed below for reference, and the rate stays editable.
Why property tax can be entered as an amount
A rate applied to market value is only an order of magnitude. When you know your actual tax bill, entering it gives an exact figure for the current year.
How the savings plan is simulated
The target is a share of the hidden counterparties (property tax, erosion, wear, resale risk). It is divided into equal monthly deposits, and the balance is simulated month by month with monthly compounding. The chart and the totals come from the same simulation. Insurance is excluded, because it appears in the loan offer.
Sources and hypotheses by country
Inflation figures checked in September 2026. Other rates are shown with their reference year; items marked as hypotheses have no statistical source.
France (€)
- Monetary erosion (E) ECB: medium-term inflation target (2021) 2% Official
- Monetary erosion (E) INSEE: average inflation in 2025 (2025) 0.9% Official
- Property tax (I) Property tax: order of magnitude relative to property value (2024) 1% Market data
- Wear (D) Building wear: calculator hypothesis 1.5% Hypothesis
- Insurance (A) Borrower insurance: average rate (2025) 0.36% Market data
- Resale risk (R) Forced-sale discount: calculator hypothesis 10% Hypothesis
Spain (€)
- Monetary erosion (E) ECB: medium-term inflation target (2021) 2% Official
- Monetary erosion (E) INE: CPI, 2025 annual average (2025) 2.7% Official
- Property tax (I) IBI: average rate (2024) 0.6% Market data
- Wear (D) Building wear: calculator hypothesis 1.5% Hypothesis
- Insurance (A) Borrower insurance: calculator hypothesis 0.35% Hypothesis
- Resale risk (R) Forced-sale discount: calculator hypothesis 10% Hypothesis
United States ($)
- Monetary erosion (E) Federal Reserve: longer-run inflation goal (2012) 2% Official
- Monetary erosion (E) BLS: CPI, December 2024 to December 2025 (2025) 2.7% Official
- Property tax (I) ATTOM: annual property tax report (2024) 0.86% Market data
- Wear (D) Building wear: calculator hypothesis 1.5% Hypothesis
- Insurance (A) PMI: range 0.46% to 1.5% (2025) 0.6% Market data
- Resale risk (R) Forced-sale discount: calculator hypothesis 10% Hypothesis
What the calculator does not do
It holds property tax, insurance and rates constant over the term, and ignores tax deductions, early repayment and renegotiation.
It does not model variable-rate loans, deferred repayment periods or loan fees.
Its results depend on the rates you enter. They support an analysis; they are not financial advice.
Theoretical foundation
TrueDebt applies a reading of credit developed in the Digital Synapse Exchange corpus: a loan engages counterparties beyond the price displayed, and a fair account of the operation must name them.
Read “The counterparty: competition or commutativity” How to read the corpus