The three numbers that matter
- NPV (Net Present Value) — today's value of every future cash flow: down payment out, monthly costs out, sale proceeds in. Positive NPV means the purchase beats the discount rate.
- IRR (Internal Rate of Return) — the discount rate that would make NPV zero. Compare it to what you'd earn elsewhere.
- Discount rate — the "cost of your money." Ledger defaults this to the current 10-year US Treasury yield (a risk-free benchmark) but lets you override it.
Why the 10-year Treasury?
The 10-year Treasury is the standard "risk-free rate" in corporate finance. If a home purchase can't beat locking money in Treasuries, the numbers don't justify the risk. Ledger fetches the live rate from home.treasury.gov so your NPV always reflects today's opportunity cost.
Reading the result
- NPV > 0 & IRR > discount rate — the purchase is financially additive vs the alternative.
- NPV ≈ 0 — you're indifferent between buying and investing the down payment. Non-financial factors (stability, lifestyle) decide.
- NPV < 0 — you're paying a premium for ownership. That may still be worth it — just know the number.