Compare the true total cost of renting vs. buying a home. See which builds more wealth over your time horizon.
Buying scenario
Renting scenario
| Cost breakdown | Buying | Renting |
|---|
This is a simplified comparison. Actual costs include insurance, maintenance (1–2%/year for homeowners), closing costs (2–5%), HOA fees, renter's insurance, and opportunity cost of the down payment. Always consult a financial advisor for major housing decisions.
The classic advice that "buying is always better than renting" isn't always true. Whether buying makes financial sense depends on your time horizon, local market conditions, mortgage rates, and the price-to-rent ratio in your area.
In general, buying tends to win over longer time horizons (7+ years) because you build equity and benefit from appreciation. Renting tends to win for shorter stays because the upfront costs of buying (closing costs, moving, repairs) haven't been recouped yet.
A useful rule of thumb: multiply the home's value by 5% and divide by 12. If your monthly rent is less than this number, renting may be better. For a $350,000 home: $350,000 × 5% ÷ 12 = $1,458/month. If you're renting for $1,800, buying might make more sense (assuming a long enough time horizon).
Generally 5–7 years minimum. Closing costs (2–5% when buying, 6–8% when selling) need time to be offset by equity building and appreciation. In high-appreciation markets, the break-even may come sooner.
No, but it avoids Private Mortgage Insurance (PMI), which adds 0.5–1% of the loan amount annually. FHA loans allow as little as 3.5% down. Some conventional loans allow 3–5%. However, a larger down payment means lower monthly payments and less total interest.
Home maintenance (budget 1–2% of home value per year), homeowner's insurance, HOA fees, closing costs on both purchase and future sale, property tax increases, and the opportunity cost of your down payment (what it could earn if invested instead).
Every figure this calculator uses comes from a published guideline or peer-reviewed study. Each formula is named and linked to the source that defines it, so you can check where the number comes from.
Last reviewed by Ellis Hartley. Population-average formulas cannot account for individual medical or financial circumstances — see our editorial policy and limitations.