Is It Better to Rent or Buy a Home?
Whether renting or buying is cheaper depends mostly on how long you'll stay — buying rarely wins if you move within about five years. Buying carries large upfront costs (down payment, closing) and exit costs (~6% to sell), so you need enough time for appreciation and equity to outweigh them. Renting stays flexible and lets you invest the money you'd have tied up in a down payment.
How This Calculator Compares the Two
It models the full picture, not just rent versus mortgage. For buying, it totals your down payment, mortgage payments, property tax, insurance, and maintenance, then subtracts the equity you'd walk away with after selling costs. For renting, it totals your rent (grown each year) and subtracts the investment gains from putting your down payment in the market instead. The lower net cost wins.
The Numbers That Decide It
Four inputs move the result most: years you'll stay (longer favors buying), mortgage rate (higher favors renting), the rent-to-price ratio (cheap rent favors renting), and expected appreciation. A common rule of thumb — the "price-to-rent ratio" — says if a home costs more than ~20× the annual rent, renting is often the better financial deal. Fine-tune the mortgage side with our Mortgage Calculator and Home Affordability Calculator.
Beyond the Math
The calculator answers the financial question, but not the whole one. Buying offers stability, forced savings, and freedom to renovate; renting offers mobility and no exposure to a housing downturn or surprise repairs. If the net costs are close, let lifestyle break the tie. Whatever you choose, invest the difference — a renter who banks the savings can come out ahead of a buyer. See our Compound Interest Calculator to model that.