Buy vs Rent Calculator

Should you buy a home or continue renting? This calculator helps you make an informed decision by comparing the total cost of ownership versus renting and investing the difference.

How It Works

The calculator considers all costs associated with both options:

Buying Costs

• Down payment and closing costs (upfront)
• Monthly mortgage payment (principal + interest)
• Property taxes (annual, as % of home value)
• Home insurance (annual premium)
• HOA fees (monthly, if applicable)
• Maintenance (typically 1% of home value annually)
• Home appreciation (historical average ~3-4% annually)

Renting Costs

• Monthly rent (increases over time)
• Renter’s insurance (typically much cheaper than homeowner’s)
• Investment returns (what you earn by investing your down payment + monthly savings)

Key Insights

The calculator shows:

• Break-even point: How many years until buying becomes financially better
• Net position: Your total wealth in each scenario after X years
• Monthly comparison: What you’re actually paying each month
• Allocation charts: Where your money goes

Use Cases

Scenario 1: High-Cost Urban Area

In expensive cities like SF or NYC, renting often makes more financial sense for 10+ years due to:

• Very high home prices relative to rent
• Higher opportunity cost of down payment
• Flexibility to relocate for career opportunities

Scenario 2: Growing Family

Buying may make sense if:

• You plan to stay 7+ years
• Local rent is high relative to home prices
• You value stability and customization
• Tax benefits (mortgage interest deduction)

Scenario 3: Market Timing

Consider current conditions:

• Rising interest rates: Favor renting (higher mortgage costs)
• Falling home prices: Wait to buy
• Hot rental market: Buying may be better

Calculator

Important Notes

⚠️ This calculator makes assumptions:

• Home appreciation is steady (reality: volatile)
• Rent increases are steady (reality: varies by market)
• You invest the difference (requires discipline)
• Investment returns are steady (reality: market volatility)
• No major repairs (reality: stuff breaks)

💡 Non-financial factors matter:

• Stability and control over your space
• School districts and community
• Career flexibility and relocation likelihood
• Emotional value of homeownership
• Time and effort of maintenance

🎯 Best practice: Run multiple scenarios with conservative assumptions. If renting wins in all scenarios, it’s probably the better choice financially.