Why use this calculator
The rent vs. buy decision is one of the biggest financial choices you can make. This calculator compares total costs including mortgage payments, taxes, appreciation, and equity buildup against rising rent costs over multiple time horizons.
How to use it
Enter the home price, down payment, mortgage details, and current rent. Adjust appreciation, property tax, insurance, and maintenance rates. The calculator compares costs over 5, 10, and 20 year periods.
The formula
Buy Cost = Down Payment + Mortgage Payments + Property Tax + Insurance + Maintenance - Home Equity. Rent Cost = Sum of monthly rent with annual increases over the period.
Worked examples
$350K home, $70K down, 6.5% rate vs $2,000/month rent
Buying typically becomes advantageous around the 7-10 year mark
$500K home, $100K down, 7% rate vs $2,500/month rent
Higher rates extend the breakeven period for buying
When people use it
- Deciding whether to buy a first home or continue renting
- Evaluating whether to sell a home and rent in a new market
- Comparing investment returns of down payment vs renting and investing
- Understanding the true cost of homeownership beyond the mortgage
Tips
- Buying is generally better for longer time horizons (7+ years)
- Do not forget closing costs (2-5% of home price) when buying
- Consider opportunity cost of the down payment if invested instead
- Location-specific factors like rent control laws can shift the analysis
Questions people ask
- What costs does this include for buying?
- Mortgage payments, property taxes, homeowner's insurance, and maintenance. It does not include closing costs, HOA fees, or renovation costs.
- How does home appreciation affect the result?
- Appreciation increases the home's value and your equity over time, reducing the net cost of buying. Higher appreciation strongly favors buying.
- What about tax benefits of homeownership?
- Mortgage interest deduction and property tax deduction can reduce the effective cost of buying, but this calculator does not include tax benefits for simplicity.