Finance category
Mortgage, loan, investing, tax, and money calculators.
Primary Residence Conversion Calculator
Many homeowners turn an old primary residence into a rental when they upsize. The decision hinges on whether projected rent covers PITI plus operating reserves and whether the conversion timing keeps the original mortgage pricing intact. This calculator quantifies cashflow, occupancy-rule compliance, and the timing tradeoff against the §121 capital gains exclusion.
Principal, interest, taxes, insurance
12+ months avoids occupancy fraud questions
NOI / mo
$1,848
Cashflow / mo (after PITI)
-$2
Annual cashflow
-$24
Monthly opex reserve
$552
Conversion timing
Compliant
How the math works
Converting a primary residence to a rental keeps the better mortgage rate and lower down payment that owner-occupied financing delivered, but only if the borrower honored the 12-month occupancy intent on the original note.
After conversion, the property loses §121 capital gains exclusion eligibility (must have lived 2 of last 5 years to claim) and depreciation begins on the lower of cost basis or fair market value at conversion.
How to Use
- Enter projected market rent and current PITI on the property.
- Enter vacancy, management, and maintenance reserve percentages.
- Enter how many months you've lived in the home before conversion (12+ recommended).
- Review NOI, monthly cashflow, and occupancy compliance flag.
Frequently Asked Questions
Why does 12 months matter?
Most owner-occupied mortgage notes contain a 12-month occupancy clause. Renting out earlier without lender notification can trigger acceleration of the loan as occupancy fraud.
What happens to the §121 exclusion?
You can still claim up to $250K ($500K married) of cap gain exclusion if you sell within 3 years of moving out — meeting the 2-of-last-5 years primary residence test.
Do I need to refinance?
Generally no — once you've satisfied the 12-month occupancy clause, the loan stays in place at its original rate. Notify your insurance carrier so the policy converts to landlord/dwelling fire coverage.
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