Home Purchase Details
Rental Details
Investment Assumptions
What is a Rent vs Buy Calculator?
A rent vs buy calculator compares the total costs of renting versus buying a home over time. It factors in mortgage payments, property taxes, insurance, maintenance, appreciation, investment returns on down payment savings, and rent increases to help you make an informed housing decision.
Price-to-Rent Ratio
Calculate: Home Price ÷ Annual Rent
- Below 15: Buying significantly favored
- 15-20: Borderline, depends on other factors
- Above 20: Renting significantly favored
Key Considerations
Buying Pros:
- Builds equity through principal payments
- Potential for home appreciation
- Tax benefits (mortgage interest deduction)
- Stability and permanence
- Freedom to modify and customize
Buying Cons:
- Large upfront costs (down payment, closing costs)
- Responsible for maintenance and repairs
- Less flexibility to move
- Potential for market decline
Renting Pros:
- Lower upfront costs
- Maintenance handled by landlord
- Flexibility to relocate
- Can invest down payment difference
Renting Cons:
- No equity buildup
- Rent increases over time
- Less stability (landlord can sell)
- Cannot modify property
Frequently Asked Questions
Is it always better to buy than rent?
No! It depends on local market conditions, your time horizon, and your financial situation. In some markets renting is much cheaper, in others buying is clearly better. Use this calculator to analyze your specific situation.
How long must I stay in a home for buying to be worth it?
Typically 5-7 years. Transaction costs (7-10% of home value) and the time needed for appreciation to overcome these costs mean buying usually wins only if you stay longer than 3-5 years. 10+ years strongly favors buying if affordable.
What is the 5% rule for rent vs buy?
Multiply home price by 5%. If annual rent is greater than 5% of home price, rent. If less, buy. Example: $400,000 home × 5% = $20,000/year = $1,667/month. If rent costs more than $1,667/month, renting is better.
What costs am I forgetting as a homeowner?
Commonly overlooked costs: Property taxes (1-3% of home value annually), home insurance (0.5-1%), maintenance (1-3%), utilities (often higher than rentals), and HOA fees ($200-500/month). Plan for 1-2% of home value annually for maintenance.
About This Calculator
Frequently Asked Questions
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