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How to Use Our Rent vs Buy Calculator

3 min read

How to Use Our Rent vs Buy Calculator

The rent-versus-buy decision is one of the biggest financial choices you will face. Our Rent vs Buy Calculator compares the true long-term costs of each option.

What to Enter

For Buying:

  • Home Price -- The purchase price of the home you are considering.
  • Down Payment -- Your upfront cash investment (typically 5-20%).
  • Mortgage Rate -- Your expected interest rate.
  • Property Taxes -- Annual property tax (typically 0.5-2.5% of home value).
  • Home Insurance -- Annual homeowner's insurance cost.
  • Maintenance -- Estimated annual maintenance (rule of thumb: 1-2% of home value).
  • HOA Fees -- Monthly homeowner's association fees, if applicable.

For Renting:

  • Monthly Rent -- Your current or expected rent.
  • Renter's Insurance -- Annual renter's insurance cost.
  • Annual Rent Increase -- Expected yearly rent increase (typically 3-5%).

Shared:

  • Time Horizon -- How many years you plan to stay.
  • Investment Return -- What you could earn by investing the money you save by renting.
  • Home Appreciation -- Expected annual home value increase (historically 3-4%).

What the Results Show

The calculator compares the total cost of ownership versus the total cost of renting over your time horizon, accounting for:

  • Mortgage payments, taxes, insurance, and maintenance for buying
  • Rent payments and the opportunity cost of not investing your down payment for renting
  • Home equity buildup and appreciation for buying

The Key Insight

The answer depends heavily on how long you stay. Buying typically becomes cheaper after 5-7 years due to equity buildup and fixed mortgage payments. If you plan to move sooner, renting is often the better financial choice because closing costs and transaction fees eat into any equity gains.

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