LOANS & MORTGAGES CHANNEL

Rent vs Buy Calculator

Compare long-term costs of renting a home versus purchasing a home side-by-side.

Calculator Variables

Calculation Overview

Compare the net financial costs of renting a home versus buying a property over a specified timeline.

Mathematical Model & Formula

Net Buy Cost = Buy Costs - Future Equity Gain

Sums all buying outlays and offsets them by home appreciation and principal payoff to yield the true cost of purchase.

Variables Defined:

Worked Example Scenario

Scenario: Renting for $2,000/mo vs Buying $350k home.

Calculate cumulative rent with rent inflation.
Calculate mortgage, taxes, and home value growth.

Result: Yields comparison balances.

Frequently Asked Questions

What is the "5% rule" in rent vs buy?

Buying typically has unrecoverable costs of around 5% of home value annually (property taxes, maintenance, interest). If rent is cheaper than that, renting is preferred.