Rent vs Buy Calculator
Should you rent or buy? Compare the total costs of renting vs buying over time and make the best financial decision for your situation.
Rent Details
Buy Details
Should You Rent or Buy?
The rent vs buy decision depends on many factors including how long you plan to stay, local real estate prices, interest rates, and your personal financial situation. There is no one-size-fits-all answer.
When Buying Makes Sense
- You plan to stay in the same location for 5+ years
- You have a stable income and emergency fund
- You can afford a 20% down payment without stretching
- Your monthly payment would be similar to or less than renting
When Renting Makes Sense
- You are planning to move within 1-3 years
- You have high-interest debt to pay off first
- Home prices in your area are very high relative to rents
- You prefer flexibility and lower maintenance responsibilities
Frequently Asked Questions
Is it better to rent or buy a home?
The rent vs buy decision depends on: how long you plan to stay (typically 5+ years favors buying), current mortgage rates vs rent prices, your financial situation, and local market conditions. Use our calculator to run the numbers for your specific situation.
What is the '5-year rule' for buying a home?
The 5-year rule suggests you should stay in a home for at least 5 years to recoup closing costs (typically 2-5% of home price), moving costs, and the initial investment. Shorter stays often favor renting.
What costs should I consider when buying?
Beyond the down payment, budget for: closing costs (2-5%), moving costs, ongoing maintenance (1-2% of home value/year), property taxes, homeowners insurance, HOA fees, and property management if applicable.
How does homeownership build wealth?
Homeownership builds wealth through: (1) Equity - paying down the mortgage, (2) Appreciation - home value increases over time (~3-5% historically), (3) Locked-in housing costs - fixed-rate mortgage doesn't increase with inflation, unlike rent.
What about the opportunity cost of a down payment?
Money invested in a down payment could alternatively be invested in the stock market. Historically, investing the 20% down payment in a diversified portfolio has outperformed homeownership in many markets, especially shorter timeframes.