How can I adjust the present value formula (PV) to account for also having to pay monthly property taxes?
If I know how much monthly payment I can afford (PMT), I can use Excel's
PV formula to determine how much I can afford to borrow when getting a mortgage. Add your downpayment to that, and you can determine how much house you can afford to buy (excluding transaction fees, closing costs, etc).
If I wanted to include property taxes to this calculation, how would I accurately do it? Assuming we pay it monthly, property taxes would be a significant chunk of your monthly payment, but it is a function of the value we're trying to compute, i.e. the purchase price of the home times the local property tax rate. Thus we only know it after getting our answer. Given the purchase price is what we're calculating, is there a way to mathematically account for this in the input to the calculation?