Rent vs Buy Calculator

Use our simple rent vs buy calculator to determine which option is right for you.Should you rent or buy a home? Use our simple rent vs buy calculator to find out which option is best for you.

Where do you plan to live?

How many years will you stay?

Bedrooms

Bathrooms

Renting

Comfortable Monthly Rent

Buying

Home Price

Down Payment

Mortgage Interest Rate

Property Tax Rate

Monthly HOA Fees

Homeowners Insurance Rate

Loan Type

Home Price Growth Rate

Rent Growth Rate

Investment Return Rate

Inflation Rate

Marginal Income Tax Rate

Buying Closing Costs

Seller Closing Costs

Maintenance Costs

Renters Insurance

Renter Security Deposit

Advanced Options

Renting saves you $970 over 5 years

If you buy, you'll break even after 5 years and 2 months.

Renting saves you $16 per month

Renting

$2,602/monthly est

Initial Costs

$4,000

Cost of Rent

$127,372

Rental Insurance

$1,681

Net Proceeds

$2,000

Total cost after 5 yrs

$156,132

Net worth from home

Buying

$157,101/monthly est

Initial Costs

$69,000

Cost of Mortgage

$105,763

Recurring Costs

$70,420

Net Proceeds

$150,229

Total cost after 5 yrs

$157,101

Net worth from home

-$108,233

Should you rent or buy a home? Use our simple rent vs buy calculator to find out which option is best for you.

Is Renting or Buying Within Your Timeline?

When weighing the decision between renting and buying a home, consider your timeline and the duration you intend to stay in the property. Renting is a suitable option for short-term or uncertain living arrangements, providing the flexibility to relocate easily when needed. On the other hand, buying a home is a favorable choice for individuals looking to establish long term roots, as it enables equity accumulation and potential investment growth over time. To make an informed decision, assess your timeline, anticipated lifestyle changes, and financial goals to determine whether renting or buying aligns better with your housing requirements.

How Much Can You Afford?

When it comes to buying a home, there are several factors to consider in order to determine how much you can afford. Your income, expenses, debt-to-income ratio, credit score, down payment, and potential mortgage terms all play a role in this decision-making process. To get a clear picture of your financial capacity, it's recommended to utilize online calculators, seek advice from lenders, and establish a comprehensive budget. By doing so, you can better understand what you can comfortably afford in terms of monthly mortgage payments, upfront costs, and ongoing home ownership expenses. It is important to be practical and honest about your financial situation. Selecting a home that fits within your budget is essential for ensuring long-term financial stability as a homeowner. By taking these steps and being mindful of your financial limits, you can make a well-informed decision that sets you up for successful home ownership.

Costs of buying a home

Home price

The home price is the total cost or value of a residential property that is up for sale. It represents the agreed-upon amount that a buyer will pay to acquire the home. Additional expenses like closing costs, property taxes, and insurance premiums are usually not included in the home price.

Home value

Home value is the estimated worth of a residential property in the real estate market. It takes into account various factors such as the property's physical condition, location, size, amenities, and recent sales of similar properties in the neighborhood. Understanding the value of a home is vital for buyers as it impacts the listing price, potential appreciation, financing options, and overall investment prospects of the property.

Monthly mortgage payment

Your monthly mortgage payment is the amount you pay each month to your lender to pay off the loan you took out to buy your home. This payment usually includes two main components: the principal, which goes towards paying off the initial loan amount, and the interest, which covers the cost of borrowing the money. In some cases, your payment may also include funds set aside for property taxes and homeowners insurance if your lender handles these expenses for you.

Down payment

A down payment is an initial payment made by a homebuyer when purchasing a property. It is usually a percentage of the total purchase price and is paid at the closing of the deal. This payment is separate from the mortgage amount borrowed and serves to show the lender the buyer's financial responsibility and dedication to the purchase.

Mortgage interest rate

The mortgage interest rate is a critical component in the cost of borrowing money to buy a home. It represents the percentage of the loan amount that borrowers pay to lenders for this service. This rate can either remain fixed over the loan term or vary based on market conditions. Understanding the interest rate is essential for anyone considering a mortgage, as it directly impacts the total amount paid over time.

Closing costs

Purchasing a home involves various expenses known as buying closing costs. These costs are incurred by the buyer during the final stages of a real estate transaction. They include fees related to obtaining a mortgage, conducting a home appraisal, title search and insurance, attorney fees, loan origination fees, and other miscellaneous charges. It's important to note that buying closing costs are paid at the closing of the property purchase, separate from the down payment and other upfront expenses.

Mortgage insurance

Mortgage insurance serves as a safeguard for lenders and mortgage companies in the event that a borrower is unable to meet their loan obligations. It is a commonly required protection for homebuyers who place a down payment below a specific percentage of the home's purchase price. Varieties of mortgage insurance exist, including private mortgage insurance (PMI) for conventional loans and mortgage insurance premium (MIP) for FHA loans. The expense of mortgage insurance is incorporated into the monthly mortgage payment until the borrower attains a predetermined level of equity in the property.

Homeowners insurance

Homeowners insurance is a type of insurance policy that provides financial protection for a homeowner in case of property damage, theft, or liability claims. It typically covers the physical structure of the home, personal belongings, and liability for injuries that occur on the property. Homeowners insurance is required by most mortgage lenders as a condition for obtaining a home loan. It helps safeguard homeowners from financial loss due to unforeseen events that may damage or affect their property.

HOA fees

Monthly HOA (Homeowners Association) fees are regular payments made by homeowners to their homeowners association. These fees support the management and upkeep of common areas and amenities within a residential community or building. They fund essential services like landscaping, security, maintenance of shared facilities, and community programs. Homeowners usually pay these fees each month, separate from their mortgage payments and property taxes.

Loan type

When purchasing a home, selecting the right loan type is crucial. There are various options available, such as conventional loans, FHA (Federal Housing Administration) loans, VA (Veterans Affairs) loans, and USDA (U.S. Department of Agriculture) loans. Each loan type comes with its own set of eligibility criteria, down payment choices, and terms. It's essential for borrowers to understand these differences and choose the loan type that aligns best with their financial circumstances and requirements.

Adjustable rate mortgage (ARM): Is a unique home loan option that allows the interest rate to fluctuate over time in response to market changes. Initially, an ARM typically offers a lower interest rate compared to a fixed-rate mortgage. However, this rate can vary up or down following an initial period. As a result, borrowers may notice fluctuations in their monthly mortgage payments based on market conditions. While ARMs provide flexibility, they also come with a degree of risk due to potential interest rate adjustments.

Fixed rate mortgage: Is a reliable option for home buyers seeking stability in their monthly payments. With this type of home loan, the interest rate remains constant for the entire duration of the loan. This offers borrowers predictability and peace of mind, as they can count on consistent principal and interest payments. Many home buyers appreciate the security that a fixed rate mortgage provides, shielding them from market fluctuations and ensuring a steady financial path.

Costs of renting a home

Cost of rent

Rent is the monthly payment made by tenants to landlords or property owners for the privilege of living in a residential property. This payment is outlined in the lease agreement and grants tenants the right to occupy the property for a set period. The cost of rent can fluctuate depending on factors like the property's location, size, amenities, and current market conditions.

Initial costs

When renting a home, it's important to be aware of the initial costs involved. These are the upfront expenses that tenants must pay before moving into a rental property. They typically encompass the first month's rent, security deposit, application fees, and any other charges outlined in the lease agreement. These costs are paid at the start of the tenancy and are distinct from the monthly rent payments.

Security deposit

A security deposit is an amount of money that tenants provide to landlords or property managers before moving into a rental property. This deposit acts as a safeguard for the landlord in case of property damage or unpaid rent. Upon the lease's conclusion, the security deposit is usually returned to the tenant, minus any deductions for damages or unpaid rent as outlined in the lease agreement.

Renters insurance

Renters insurance is a form of protection for individuals who rent a home or apartment. This type of insurance offers financial security by covering personal belongings in scenarios such as theft, fire, and other specified risks. Additionally, it provides liability coverage in the event of injuries sustained by visitors on the rented premises. Renters insurance is essential for tenants as it ensures the replacement of lost or damaged possessions and safeguards against potential legal liabilities.

Should I Rent or Buy a House?

When it comes to the choice between renting or buying a house, there are several factors to consider that can impact your decision. Renting offers flexibility, lower initial costs, and a hassle-free maintenance experience. On the other hand, buying a house allows you to build equity, potentially benefit from property appreciation, and provides a sense of stability. To make the best decision for yourself, it's important to evaluate your long-term plans, financial preparedness, current market conditions, and lifestyle preferences. By weighing these factors carefully, you can determine whether renting or buying is the right fit for your needs and goals.

Pros and cons of buying a home vs renting

Home equity

Home equity refers to the value of your home minus what you owe on your mortgage or any other debts related to the property. As your property value goes up and you make mortgage payments, your home equity grows. This equity can be a valuable asset that can be used for different purposes like renovations, consolidating debt, or meeting other financial goals.

Return on investment

When it comes to investing in a home, understanding the investment return rate is key. This rate, also known as the rate of return, indicates the percentage of profit or loss made on an investment compared to the initial investment amount. It takes into account various factors such as property appreciation, rental income, and expenses to determine the overall performance of the property as an investment asset.

Tax deductions

The marginal income tax rate is the percentage of tax applied to each additional dollar of income earned. It plays a significant role in determining the tax deductions available to homeowners, including those for mortgage interest and property taxes. By leveraging these deductions, homeowners can effectively reduce their taxable income and ultimately lower their tax liability.

Property taxes

Property tax rates determine the annual tax imposed on their property's assessed value. These rates vary by location and are essential for funding public services like schools, roads, and emergency services. Understanding how property tax rates work is important for all homeowners to manage their finances effectively.

Maintenance costs

Homeowners incur maintenance costs as ongoing expenses to maintain their property in good condition. These costs encompass regular repairs, upkeep, and replacements of various systems and components within a home, including HVAC systems, plumbing, electrical work, and landscaping. Having a grasp of maintenance costs is key for homeowners as it plays a significant role in preserving the long-term value and functionality of their property.

Recurring costs

Owning a home comes with recurring costs, which are the regular expenses that homeowners need to cover to keep their property running smoothly. These costs encompass property taxes, homeowners insurance, mortgage payments, HOA fees (if applicable), maintenance, and utility bills. It's crucial to factor in these ongoing expenses when planning your budget for buying a home, in addition to the initial upfront costs.

Rent increases

Rent increase is the adjustment of the monthly rental amount that tenants need to pay for their rental property. This change can be influenced by factors like inflation, market conditions, rising landlord expenses, or property upgrades. It's crucial for tenants to understand how rent increases can affect their housing costs and potentially shape their choices between renting and home ownership.

Rent growth rate

The rent growth rate signifies the percentage rise in rental prices within a defined time frame, usually on an annual basis. This metric showcases the fluctuation in rental rates for residential properties in a specific location and holds significance for landlords, real estate investors, and tenants alike. It plays a pivotal role in determining rental income potential and can sway the decision between renting and buying a home in terms of affordability.

Home price growth rate

The home price growth rate is a metric that showcases the percentage increase in the value of residential properties within a set time frame. This figure reveals the appreciation or depreciation of average home prices over time. Understanding the home price growth rate is vital for individuals involved in real estate investment, as it directly influences the potential return on investment for homeowners and property investors.

Inflation rate

The inflation rate represents the percentage shift in the overall prices of goods and services during a specific period. When considering purchasing a home, inflation can influence different factors like housing expenses, property prices, mortgage interest rates, and daily living costs. Having a grasp of the inflation rate is important for homeowners as it can influence the feasibility of owning a home and the actual worth of their property in the long run.

Does Renting or Buying Work With Your Lifestyle?

When determining whether renting or buying a home aligns with your lifestyle, it's essential to weigh various factors. Consider your financial readiness, desired housing flexibility, maintenance responsibilities, and long-term housing preferences. Renting offers flexibility and minimal commitment, making it a suitable choice for those with evolving lifestyles or uncertainty about their location. On the other hand, buying provides stability, the opportunity to build equity, and the chance to customize your property to your liking. This option appeals to individuals looking to establish long-term roots and explore investment potential. To make the best decision for your lifestyle, assess your priorities, financial goals, and housing preferences. By carefully evaluating these aspects, you can determine whether renting or buying is the right choice for you.