Rent vs. Buy Calculator
Should I rent or buy? This calculator evaluates the decision from a purely financial standpoint. Results are estimates based on your inputs and assumptions about future rates.
Result
The following is the average cost based on the length you stay for the next 30 years.
| Staying Length | Average Buying Cost | Average Renting Cost | ||
|---|---|---|---|---|
| Monthly | Annual | Monthly | Annual |
What to Expect When Buying a Home
Homeownership is a relatively new phenomenon in society. It did not become easily accessible to the average person until the mid-twentieth century. Before this time, homeownership was common only for the wealthy.
In the U.S. today, homeownership is as American as bald eagles and hot dogs. Moreover, the federal government offers tax incentives for owning a home, a strong reason not to rent. Furthermore, many believe that mortgages build equity.
While a mortgage can technically build equity, it is not significant in most cases. Studies have found that the average appreciation rate for home prices after adjusting for inflation is quite low. After factoring in yearly maintenance, repairs, and annual property taxes, most homeowners will find that their home purchase investment merely breaks even.
What to Know When Renting
Rent is the act of paying a landlord for the right of use on a residential property. The primary cost of renting a home is the monthly rental fee. Other costs include the security deposit, application fee, and possibly, insurance.
A rental home is typically considered a temporary residence. Its main advantage is the flexibility of negotiable lease terms, which generally range from a few months to a few years. Therefore, it makes sense for those with an uncertain future to rent instead of buy.
Should I Consider Buying or Renting?
At least from a purely financial perspective, this decision comes down to two important questions:
- Do I have enough savings to purchase a home?
- Will I live long enough in the home?
As a general rule of thumb, the longer the intended stay, the more it makes sense (financially) to buy. Otherwise, one should consider renting.
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How to Use the Rent vs. Buy Calculator
This tool helps you compare the financial costs of renting a home versus buying a home over time. Follow these steps:
1. Enter Home Purchase Details
(Click the “Home Purchase” tab)
| Field | Description | Example Value |
|---|---|---|
| Home price | Total cost of the home you want to buy | $300,000 |
| Down payment | Initial payment (usually 20% of home price) | $60,000 |
| Interest rate | Mortgage interest rate (annual %) | 5.5% |
| Loan term | Mortgage duration (years) | 30 |
| Buying closing costs | Fees paid when purchasing (appraisal, title, etc.) | $6,000 |
| Property tax | Annual property tax | $3,000 |
| Property tax increase | Expected yearly increase in property tax (%) | 2% |
| Home insurance | Annual homeowners insurance cost | $1,200 |
| HOA fee | Homeowners Association fees (if applicable) | $0 |
| Maintenance cost | Estimated yearly maintenance expenses | $2,000 |
| Home value appreciation | Expected yearly increase in home value (%) | 3% |
| Cost/insurance increase | Expected yearly increase in insurance/maintenance (%) | 2% |
| Selling closing costs | Fees when selling the home (agent commission, etc.) | $18,000 |
2. Enter Home Rental Details
(Click the “Home Rent” tab)
| Field | Description | Example Value |
|---|---|---|
| Monthly rental fee | Current rent payment | $1,500 |
| Rental fee increase | Expected yearly rent increase (%) | 3% |
| Renter’s insurance | Monthly insurance cost | $20 |
| Security deposit | Upfront deposit (refundable) | $1,500 |
| Upfront cost | Any other initial fees (application, etc.) | $0 |
3. Enter Your Financial Information
(Click the “Your Information” tab)
| Field | Description | Example Value |
|---|---|---|
| Average investment return | Expected yearly return if you invest instead (%) | 7% |
| Marginal federal tax rate | Your federal income tax rate (%) | 22% |
| Marginal state tax rate | Your state income tax rate (%) | 5% |
| Tax filing status | Single, Married (Joint), etc. | Single |
4. Click “Calculate”
- The tool will compute:
- Break-even point (how many years until buying becomes cheaper than renting)
- Monthly & annual costs for renting vs. buying over 30 years
- Interactive chart comparing costs over time
5. Interpret the Results
- “Buying is cheaper if you stay for X years or longer.”
- If you plan to stay longer than X years, buying is financially better.
- If you plan to stay less than X years, renting is cheaper.
- Cost Comparison Table
- Shows average monthly & yearly costs for renting vs. buying over 1–30 years.
- Chart Visualization
- Blue line = Buying costs
- Red line = Renting costs
- The point where they cross = Break-even
6. Adjust Inputs & Recalculate
- Change values (e.g., home price, rent, interest rate) to see how they affect the results.
- Click “Reset” to restore default values.
7. Save Your Calculation (Optional)
- Click “Save this calculation” to store results (demo feature; in a real app, this would save to your account).
8. Switch Languages (Top-Right Dropdown)
- Supports English, Spanish, Chinese, Urdu, French, German, Japanese, Russian, Arabic, Hindi.
- Automatically adjusts text direction for Arabic & Urdu (RTL).
Example Scenario
✅ Buying makes sense if:
- You plan to stay 5+ years
- Home prices are rising (appreciation > rent increases)
- Mortgage rates are low
❌ Renting makes sense if:
- You move frequently (<5 years)
- Home prices are stagnant
- Rent is much cheaper than mortgage payments
Rent vs Buy Financial Calculator – FAQs
1. What is the purpose of this calculator?
This tool helps you determine whether it’s more financially beneficial to rent or buy a home, based on your current and projected expenses, taxes, and investment returns.
2. How does the calculator decide which option is cheaper?
It compares:
- Total cost of homeownership (including mortgage, taxes, insurance, maintenance, etc.)
- Total cost of renting (rent, insurance, increases, deposits, etc.)
- Adjusted for investment returns on potential down payment and tax benefits.
3. What financial factors can I input?
You can input:
- Home purchase info: price, down payment, mortgage rate, closing costs, insurance, taxes, appreciation, etc.
- Renting info: monthly rent, rental increases, security deposit, renter’s insurance, upfront costs.
- Personal info: investment return rate, federal and state tax rates, filing status.
4. What assumptions does the calculator make?
- All values grow annually by your entered increase rates.
- Tax benefits and investment gains are considered based on your entries.
- Selling costs apply when calculating the net cost of buying.
5. What is the “break-even” point shown in the result?
The break-even point shows the number of years you must stay in the home for buying to become cheaper than renting.
6. What are the default values for?
They act as examples to guide you. You should update them based on your actual or estimated financial situation for accurate results.
7. Is this calculator accurate for all countries?
This calculator is most accurate for U.S.-based users due to tax treatment and cost structures but can be adapted with localized inputs.
8. Can I change the language?
Yes, there’s a language selector with multiple options including English, Español, 中文, اردو, Français, Deutsch, 日本語, Русский, العربية, हिन्दी.
9. What does the chart show?
The chart visually compares the average monthly and annual cost of renting vs buying over a 30-year timeline.
10. Can I save or export my calculation?
Yes, a “Save this calculation” button is available. The actual export/save functionality depends on the supporting JS implementation.
11. What is the “Tax Filing Status” section used for?
It helps the calculator estimate potential mortgage interest tax deductions and other tax-related calculations depending on your status.
12. Is this tool mobile-friendly?
Yes, the layout is responsive and designed to work well on mobile, tablet, and desktop screens.
13. Does this tool provide advice or just a comparison?
It gives financial comparisons only. It does not provide legal, real estate, or tax advice. Always consult professionals for major decisions.