Rent vs. Buy Calculator
Buying
Renting
What's Included
Buying costs
- Down payment
- Closing costs (2.5%)
- Mortgage P+I payments
- Property tax (1.2%/yr)
- Insurance ($1,200/yr)
- Maintenance (1%/yr)
- Less: equity built + appreciation
Renting costs
- Monthly rent paid
- Annual rent increases
- Less: investment growth of down payment
Tips
- The shorter your time horizon, the more renting tends to win — buying costs (closing, transaction fees) need years to amortize.
- The price-to-rent ratio is a quick gut check: home price ÷ annual rent. Above 20 generally favors renting; below 15 favors buying.
- This is a financial comparison only. Stability, customization, and building equity have non-financial value that varies by person.
Frequently Asked Questions
Is it always better to buy than rent?
No. Buying wins in the long run in most markets, but renting can be the better financial choice if you plan to move within 3–5 years, if home prices are very high relative to rents, or if you can invest the down payment at a high return. The break-even year is the key metric.
What is the price-to-rent ratio?
The price-to-rent ratio is the home price divided by the annual rent for a comparable property. A ratio below 15 generally favors buying; above 20 often favors renting. In many expensive cities, ratios are 25–40, making renting more competitive.
What costs does this calculator include?
Buying costs include: down payment, closing costs (2.5%), mortgage P+I, property tax, insurance, and maintenance (1%/year). Renting costs include: monthly rent with annual increases. The calculator computes the net out-of-pocket after accounting for equity built through payments and appreciation.
Does appreciation make buying always better?
Appreciation helps buyers but is uncertain. Historically US homes have appreciated ~3–4% annually, but that varies widely by market and time period. This calculator lets you adjust appreciation to model different scenarios. Even with 3% appreciation, renting can win if you move quickly.