Rent vs. Buy Calculator

---

How to Use the Rent vs. Buy Calculator

This calculator provides a more complete comparison than simply looking at a rent check versus a mortgage payment. Be sure to fill out all fields for an accurate estimate.

• Monthly Rent ($): Your current or expected monthly rent payment.
• Home Price ($): The purchase price of the home you are considering.
• Down Payment ($): The upfront cash you will pay towards the home.
• Interest Rate & Loan Term: The terms of the mortgage you expect to get.
• Property Tax, Home Insurance, HOA Fees: These are the "hidden costs" of owning. Use realistic annual estimates for taxes and insurance, and don't forget monthly HOA fees if applicable.

Understanding the Rent vs. Buy Decision

Deciding whether to rent or buy is one of the biggest financial choices you'll make. The right answer depends on your finances, your timeline, and your lifestyle.

The Financial Case for Buying

• Building Equity: Every mortgage payment you make includes a portion that pays down your loan, increasing your ownership stake (equity) in the home. This is a form of forced savings.
• Appreciation: Over the long term, real estate has historically increased in value, which can lead to a significant return on your investment when you sell.
• Tax Benefits: Homeowners can often deduct mortgage interest and property taxes from their federal income taxes.
• Stable Payments: A fixed-rate mortgage locks in your monthly housing payment for the life of the loan, protecting you from the rising rents.

The Financial Case for Renting

• Lower Upfront Cost: Renting only requires a security deposit, whereas buying requires a large down payment and thousands in closing costs.
• No Maintenance Costs: When the roof leaks or the water heater breaks, it's your landlord's problem, not yours.
• Flexibility: Renting gives you the freedom to move to a new city or a different apartment with relative ease once your lease is up.
• Opportunity Cost: The money you don't spend on a down payment and home maintenance could be invested in other assets, like stocks or bonds, that may generate a higher return.

What To Do With Your Results

This calculator gives you a snapshot of the monthly costs, but the most important factor is often your time horizon.

The Break-Even Horizon

Because of the high upfront costs of buying (down payment and closing costs), renting is almost always cheaper in the short term. It typically takes several years of building equity and appreciation for the financial benefits of owning to "break even" with the costs of renting.

A common rule of thumb is that if you don't plan to stay in a home for at least 5 years, buying may not be the right financial move.

It's a Lifestyle Choice, Too

Don't forget the non-financial aspects. Buying a home offers stability and the freedom to customize your living space. Renting offers flexibility and a more carefree lifestyle. The right choice is the one that best fits both your budget and your life plans.