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Rent vs. Buy Calculator

Compare the holistic total cost of homeownership (mortgage interest, property taxes, HOA, repairs, home appreciation) against renting and investing the down payment difference.

Calculator Inputs

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Estimated Calculation Results

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Interactive Output
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fx Formula & Mathematical Methodology

Models total cost of buying over duration t: Mortgage P&I + Property Taxes (1.2%) + Maintenance/Insurance (1.5%) + Buying/Selling Transaction Costs (7%) minus Equity Built and Home Appreciation. Models total cost of renting: Total Rent Paid + Rent Inflation (3%) minus Compounded Gains from investing the down payment and monthly cash difference. Compares Net Wealth Position at end of period.

\Delta \text{Wealth} = \text{Net Wealth}_{\text{Buy}} - \text{Net Wealth}_{\text{Rent}}

Real Numerical Example: $380,000 Home vs $2,100 Rent over 7 Years

Scenario Parameters:
Price: $380,000 | Down: 15% ($57k) | Rate: 6.5% | Rent: $2,100/mo | Duration: 7 Years
Break-even Horizon: ~4.5 Years. After 7 Years: Buying accumulates roughly $38,000 to $52,000 more in net equity wealth than renting, assuming 3.5% property appreciation.

Because transaction costs are amortized over 7 years and home equity builds, buying is financially favorable for stays longer than 4.5 years.

How to Use This Rent vs. Buy Calculator

1

Enter the purchase price of the home you are considering.

2

Input the down payment percentage and current mortgage interest rate.

3

Enter the rent cost of a comparable rental property in that same neighborhood.

4

Choose how many years you realistically expect to live in the home before moving.

5

Review the break-even year, total cumulative costs, and ending net wealth comparison.

Key Benefits & Use Cases

  • • Demystifies the common myth that "renting is throwing money away."
  • • Factors in hidden ownership costs: property taxes, home insurance, maintenance, and 6% realtor sales commissions.
  • • Identifies the exact break-even timeline for your local housing market.

Assumptions & Limitations

  • • Assumes 1.2% annual property tax and 1.5% annual home maintenance/repairs.
  • • Assumes 6-7% selling costs (realtor commissions and transfer taxes) when selling home at end of term.
Frequently Asked Questions

Got Questions About Rent vs. Buy Calculator?

No. Renting buys you shelter, flexibility, and a hard cap on housing expenses (rent is the maximum you pay; a mortgage is the minimum). Homeowners pay massive unrecoverable costs: mortgage interest, property taxes, maintenance, and HOA dues.

The general guideline is at least 5 years. Selling sooner than 5 years rarely allows enough equity appreciation to overcome 6% to 8% in realtor commissions and closing transaction fees.

Ben Felix 5% Rule estimates the unrecoverable cost of homeownership as 5% of the property value per year: 1% property tax + 1% maintenance + 3% cost of capital. If equivalent rent is less than 5% of home value divided by 12, renting is cheaper.

Investing a $60,000 down payment into stock index funds at 8% historically compounds into over $100,000 in 7 years. Tying that cash up in home equity carries a real opportunity cost.

You can refinance your mortgage to a lower rate later, reducing monthly interest costs and improving the financial advantage of buying.

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Financial Calculation Disclaimer: The outputs produced by the Rent vs. Buy Calculator are mathematical estimates based on user-supplied variables and standard financial formulas. This tool does not take into account individual tax obligations, jurisdictional regulations, or personal circumstances, and does not constitute formal financial advisory or underwriting approval. Always confirm final loan terms, investments, and tax impacts with licensed professionals.