Rent vs Buy Calculator

Compare the true long-term costs of renting versus buying to make an informed decision.

Total Cost of Renting

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Over {{ timeHorizon }} years

Net Cost of Buying

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After selling home

Recommendation

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Save {{ formatToCurrency(Math.abs(totalRentCost - netBuyCost)) }}

Break-even Point: Buying becomes cheaper than renting after {{ breakEvenYear }} years. {{ breakEvenYear <= timeHorizon ? "You'll reach this within your time horizon." : "This exceeds your planned time horizon." }}

R Renting Scenario

Historical average: 3-5% per year

Investment of Down Payment

If renting, your down payment could be invested instead.

S&P 500 historical average: ~7% after inflation

Renting Cost Breakdown

Total Rent Paid: {{ formatToCurrency(totalRentPaid) }}
Renter's Insurance: {{ formatToCurrency(totalRentersInsurance) }}
Investment Gains: -{{ formatToCurrency(investmentGains) }}
Net Cost: {{ formatToCurrency(totalRentCost) }}

B Buying Scenario

Typical: 1-2%

Historical: 3-4%

Typical: 2-5% of home price

Agent fees, closing: typically 8-10%

Buying Cost Breakdown

Down Payment: {{ formatToCurrency(downPayment) }}
Mortgage Payments: {{ formatToCurrency(totalMortgagePayments) }}
Property Tax: {{ formatToCurrency(totalPropertyTax) }}
Insurance: {{ formatToCurrency(totalHomeInsurance) }}
Maintenance: {{ formatToCurrency(totalMaintenance) }}
Closing Costs: {{ formatToCurrency(closingCostsBuy) }}
Selling Costs: {{ formatToCurrency(sellingCosts) }}
Home Equity (sale proceeds): -{{ formatToCurrency(saleProceeds) }}
Net Cost: {{ formatToCurrency(netBuyCost) }}

Time Horizon

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The longer you stay, the more likely buying will be financially advantageous due to building equity.

Cost Comparison Over Time

Understanding the Rent vs Buy Decision

Factors Favoring Buying

  • Building equity: Each payment increases your ownership stake
  • Tax benefits: Mortgage interest and property tax may be deductible
  • Appreciation: Home values historically increase over time
  • Stability: Fixed mortgage payments vs. rising rents
  • Customization: Freedom to modify your home

Factors Favoring Renting

  • Flexibility: Easier to relocate for jobs or life changes
  • No maintenance: Landlord handles repairs
  • Lower upfront costs: No down payment needed
  • Investment opportunity: Down payment can grow in the market
  • No market risk: You don't lose money if home values drop

Hidden Costs of Buying

  • Maintenance: Budget 1-2% of home value annually
  • Opportunity cost: Down payment could be invested elsewhere
  • Transaction costs: 8-10% when selling (agents, closing)
  • PMI: Extra insurance if down payment is under 20%
  • Time: Homeownership requires ongoing attention

The 5-Year Rule

A common guideline suggests you should plan to stay in a home for at least 5 years to break even on transaction costs. However, this varies significantly based on:

  • Local rent vs. purchase price ratio
  • Interest rates and home appreciation
  • Your tax situation
  • How you'd invest the down payment if renting

Disclaimer: This calculator provides estimates for educational purposes only. Actual costs vary based on location, market conditions, tax situation, and many other factors. Consider consulting a financial advisor before making major housing decisions.