Rent vs Buy: The True Comparison
This calculator accounts for mortgage payments, property taxes, insurance, maintenance, appreciation, and equity building.
Hidden Costs of Buying
- Closing costs (2-5%)
- Property taxes (0.5-2.5%/yr)
- Insurance (~0.5%)
- Maintenance (1-2%/yr)
- PMI if <20% down
The 5-Year Rule: Buying makes more sense if you stay 5-7+ years. Less than that, closing costs often make renting cheaper.
How to Use This Rent vs Buy Calculator
Enter rent amount, home purchase price, down payment, mortgage rate, and planned duration of stay. The calculator compares total costs of renting versus buying.
Formula & How It Works
Buy Cost = Down Payment + Mortgage Payments + Taxes + Insurance + Maintenance β Appreciation β Tax Deductions. Rent Cost = Monthly Rent Γ Months + Rent Increases β Investment Returns on saved down payment.
Calculation Example
Rent $1,800/mo vs. buy $350K home (5% down, 6.5% rate): buying is cheaper if you stay 7+ years. Under 5 years, renting plus investing the down payment is typically better.
Expert Tips
Add maintenance costs (1-2% of home value per year) and opportunity cost of the down payment. The 5-year rule: usually do not buy unless you plan to stay at least 5 years.
Frequently Asked Questions
Is renting always throwing money away?
No. Renting provides flexibility and frees capital for other investments. In expensive markets, renting can outperform buying.
How much should I put down?
20% avoids PMI, but programs allow 3-10% down. Calculate if higher monthly payment with PMI is still cheaper than renting.
What about tax benefits?
Mortgage interest is deductible if you itemize, but the standard deduction ($15,000/$30,000) means many homeowners don't benefit.