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Rent vs. Buy Calculator

Use this Rent vs. Buy Calculator to compare the long-term costs of renting versus buying a home. Enter realistic assumptions for rent growth, mortgage rate, property taxes, and investment returns.

Notes: This simplified model does not account for income tax deductions or credits. PMI is estimated and may drop once loan-to-value reaches about 80% of the original purchase price. Appreciation, rent growth, and returns are uncertain and not guaranteed.

Tip: Use conservative estimates for appreciation and investment returns. Small changes can meaningfully affect results over time.

Choosing between renting and buying is one of the biggest financial decisions most people make. Our Rent vs. Buy Calculator helps you compare real, long?term costs by factoring in mortgage payments, property taxes, insurance, maintenance, rent inflation, and potential home price appreciation. With clear inputs and transparent assumptions, you can see which path may fit your budget and goals.

How the Rent vs. Buy Calculator Works

The calculator compares two scenarios over a time horizon you choose. In the renting scenario, it totals your monthly rent (with an annual increase you set) plus renter’s insurance. It also estimates how your initial cash—what you would have spent on a down payment and closing costs—could grow if invested at your chosen rate of return.

In the buying scenario, the tool estimates your mortgage payment based on the loan size, interest rate, and term. It then adds ongoing homeowner costs, including property taxes, homeowners insurance, HOA dues, and maintenance. If your down payment is below 20%, it can include Private Mortgage Insurance (PMI), which may drop after you reach a typical 80% loan?to?value threshold. Finally, it projects your home’s future value using an annual appreciation rate and subtracts selling costs and any remaining mortgage balance to show potential proceeds at the end of your time horizon.

Key Inputs You Control

  • Home price, down payment percentage, and closing costs
  • Mortgage interest rate and loan term
  • Property tax rate, homeowners insurance, HOA dues, and maintenance
  • PMI rate for down payments under 20%
  • Expected home appreciation and selling costs
  • Current monthly rent, rent growth, and renter’s insurance
  • Investment return on cash you keep if renting

What the Results Mean

The calculator reports the total net cost of renting and buying over your chosen time frame. For renting, the net cost is your rent plus renter’s insurance minus the future value of your invested upfront cash. For buying, the net cost is your total out?of?pocket expenses (down payment, closing costs, mortgage, taxes, insurance, maintenance, HOA, and any PMI) minus your projected net sale proceeds after paying selling costs and the remaining loan balance. The lower net cost indicates the financially cheaper option over the period analyzed.

Assumptions and Limitations

Like any model, this tool simplifies reality. It does not factor in income tax effects (for example, potential mortgage interest or property tax deductions), opportunity costs of monthly cash flow differences, or local nuances such as special assessments. Home appreciation and investment returns are uncertain, and actual rent increases can vary by neighborhood and market cycles. Use conservative assumptions and review sensitivity by adjusting one input at a time.

Tips for Using the Calculator

  1. Set a realistic time horizon—how long you expect to stay.
  2. Use current mortgage rates and verify HOA dues and insurance quotes.
  3. Estimate maintenance at 1%–2% of home value annually for older homes.
  4. Be cautious with appreciation and return assumptions; small changes compound.
  5. Run multiple scenarios to understand best?, base?, and worst?case outcomes.

When Renting Can Beat Buying

Renting can be preferable if you plan to move soon, local property taxes are high, or if the home requires significant maintenance. In high?price markets with modest appreciation, the cash you keep invested while renting may outperform home equity growth, especially over shorter horizons.

When Buying Can Beat Renting

Buying can make sense when you’ll stay long enough to spread closing and selling costs over many years, you secure a competitive mortgage rate, and local home values are stable or rising. Building equity through principal payments can meaningfully reduce your net cost by the time you sell.

Make a Data?Driven Choice

There is no one?size?fits?all answer. Use the Rent vs. Buy Calculator to quantify the trade?offs with your own numbers. Armed with a realistic projection of costs and potential proceeds, you can choose the path that best aligns with your financial plan and lifestyle.

FAQs

How does the Rent vs. Buy Calculator decide which option is cheaper?

It compares total net costs: rent plus renter’s insurance minus invested cash growth versus buying costs minus projected sale proceeds.

What inputs matter most in the Rent vs. Buy Calculator?

Time horizon, mortgage rate, home appreciation, rent growth, maintenance, and your investment return assumption influence results the most.

Does the Rent vs. Buy Calculator include tax deductions?

No. It excludes income tax effects like mortgage interest or property tax deductions to keep results simple and transparent.

How does the Rent vs. Buy Calculator handle PMI?

If down payment is under 20%, it adds PMI and assumes it can drop when loan-to-value falls to about 80% of the original price.

Can I change the time horizon in the Rent vs. Buy Calculator?

Yes. Set how many years you expect to stay; longer horizons spread closing and selling costs and can favor buying.

What appreciation rate should I use in the Rent vs. Buy Calculator?

Use a conservative long-term local average or 0% to stress test outcomes; avoid relying on recent short-term spikes.

Does the Rent vs. Buy Calculator invest monthly savings automatically?

No. It only invests the upfront cash you keep when renting. You can run scenarios to estimate the impact of investing monthly differences.