Rent vs Buy Calculator
Compare the financial impact of renting vs buying. See total costs, equity buildup, and which option saves you money over time.
Purchase price of the home
Down payment amount (typically 10-20%)
Annual mortgage interest rate
Mortgage term length
Current monthly rent for comparable property
Expected yearly rent increase (avg: 3%)
Expected annual home value increase (historical avg: 3-4%)
Yearly property taxes (typically 1-2% of home value)
Yearly homeowners insurance
Yearly maintenance costs (rule of thumb: 1% of home value)
Monthly HOA fees (if applicable)
How many years to compare rent vs buy
Expected return if down payment was invested instead
Is it better to rent or buy a home?
It depends on your situation. Buy if: You plan to stay 5+ years, have 10-20% down payment saved, stable job/income, monthly payment fits budget (28% rule), want to build equity. Rent if: You might move in <5 years, don't have down payment saved, self-employed with variable income, housing costs >30% of income, prefer flexibility. Use "price-to-rent ratio": divide home price by annual rent. Above 20 = better to rent, 15-20 = borderline, below 15 = better to buy.
What hidden costs of homeownership should I consider?
Beyond mortgage, budget for: Property tax (1-2% of home value annually), homeowners insurance ($1,000-$3,000/year), maintenance (1% of home value yearly = $3,000 on $300k home), HOA fees ($200-$400/month if applicable), utilities (often higher than renting), closing costs (2-5% when buying, 6-10% when selling), opportunity cost (down payment could be invested). Total: expect 40-50% on top of mortgage payment.
How long until buying becomes cheaper than renting?
Typically 3-7 years depending on market. Break-even factors: Closing costs recovery (2-5% of price), home appreciation rate (3-4% historical), rent increases (3% annually average), tax benefits (mortgage interest deduction if itemizing), investment returns on down payment alternative. In high-appreciation markets: 3-4 years. In flat markets: 7+ years. This calculator shows your exact break-even point.
Should I invest my down payment instead of buying?
Compare scenarios: Buying builds forced savings via equity, leverages investment (4x-5x with 20% down), provides tax benefits, hedges inflation. Investing offers liquidity, potentially higher returns (10% stocks vs 3-4% home appreciation), diversification, no maintenance hassles. Math: If stock market returns >8% and home appreciation <3%, investing wins. But buying provides stability and emotional benefits. Many do both: smaller down payment (10%), invest the rest.