Rent vs Buy Calculator

When Renting Makes More Sense

Renting isn't "throwing money away" — that's a myth. Renting gives you flexibility, zero maintenance costs, no property tax, and the ability to invest the difference elsewhere. If you might move within 5 years, renting is almost always the better financial move.

Renting wins when: you value mobility, home prices are inflated relative to rents (price-to-rent ratio above 20), you can't afford a 20% down payment, or you'd rather invest in stocks (which historically return more than housing).

The Hidden Costs of Homeownership

Your mortgage payment is just the beginning. The real cost of owning includes:

• Property tax: 1-2% of home value per year ($4,000-8,000 on a $400K home)
• Homeowners insurance: $1,500-2,500/year
• Maintenance & repairs: 1% of home value per year (roof, HVAC, appliances)
• HOA fees: $200-500/month in many communities
• Closing costs: 2-5% when buying + 6-10% when selling (realtor commissions)
• PMI: if down payment is under 20%, add 0.5-1% of loan amount per year

The 5-Year Rule

Most financial advisors agree: if you plan to stay less than 5 years, rent. Between 5-7 years, it's a toss-up. Beyond 7 years, buying usually wins because you've had time for appreciation to offset closing costs and early mortgage payments are mostly interest. This calculator runs the actual numbers for your situation.

How Interest Rates Change the Math

At 3% mortgage rates (2020-2021), buying was almost always better. At 6.5%+ (2024-2026), the math shifts toward renting in many markets. On a $400,000 loan: 3% = $1,686/month vs 6.5% = $2,528/month. That's $842/month more — $10,000/year — just from the rate difference. Use our Mortgage Calculator to see the full breakdown.

Related Tools

Mortgage Calculator — detailed mortgage breakdown
Budget Calculator — see if you can afford to buy
First-Time Homebuyer Guide

Frequently Asked Questions