Rent vs Buy Calculator

How to use this rent vs buy calculator

This free rent vs buy calculator settles one of the biggest financial questions you will ever face: over the time you actually plan to stay, does renting or buying leave you better off? It runs entirely in your browser, needs no personal information, and updates instantly as you change any input. Enter a handful of numbers and it nets every cost of owning against the cost of renting, so you compare true total cost, not just a monthly payment against a monthly rent.

• Home price: the price of a home comparable to the rental you are weighing it against.
• Down payment: the cash you would put down; a larger down payment lowers your loan and monthly payment.
• Interest rate: your quoted mortgage rate, or today's average.
• Current monthly rent: what you pay now, or the rent for an equivalent home.
• Years you'll stay: the single most important input, because time is what lets ownership overcome its upfront costs.
• Home appreciation: the annual rate you expect the home's value to grow.

The results show your estimated monthly cost of owning, the equity you would build, and the total rent you would pay over the same period, so you can see at a glance which path comes out ahead. Change the years-you-stay field and watch the answer flip: that is the break-even horizon, and finding it is the whole point of the tool.

What is a rent vs buy calculator?

A rent vs buy calculator is a tool that compares the full, all-in cost of renting a home to the full cost of owning a comparable one over a chosen period, then tells you which is financially better. It exists because a simple side-by-side of "rent payment versus mortgage payment" is deeply misleading. That comparison ignores the down payment, closing costs, property taxes, insurance, maintenance, and the equity and appreciation that make owning worthwhile.

A good calculator accounts for all of those forces at once. On the ownership side it adds up mortgage principal and interest, taxes, insurance, maintenance, and one-time buying and selling costs, then subtracts the equity you build and the appreciation you capture. On the renting side it totals your rent (rising over time) plus renters insurance, and credits you with the investment return you could earn on the down payment you did not spend. The difference between the two totals, over your time horizon, is the real answer.

The result is not a universal verdict but a personal one. The same home can favor renting for someone moving in two years and favor buying for someone staying ten. That is why entering your own numbers, rather than trusting a generic rule, is the only way to get an answer that applies to you.

How does a rent vs buy calculator work?

Under the hood, a rent vs buy calculator runs two parallel projections over the years you plan to stay and compares the ending net cost of each.

The buying projection

It starts with your upfront costs, the down payment and closing costs (typically 2 to 5 percent of the price). Each year it adds mortgage principal and interest, property taxes, homeowners insurance, maintenance (about 1 percent of value), and any HOA dues. It then credits you with two forms of wealth: the equity from paying down principal, and the appreciation as the home rises in value. At the end it subtracts selling costs (agent commissions and fees, often 6 to 8 percent) to find your true net position.

The renting projection

It totals your rent over the same years, growing it by an assumed annual increase, and adds renters insurance. Crucially, it also credits renters with the opportunity cost advantage: the money not tied up in a down payment can be invested, so a fair calculator assumes that cash earns a return.

Whichever projection ends with the lower net cost wins. Because the buying side is front-loaded with heavy costs that only pay off over time, the answer almost always depends on how many years you stay, which is why the tool asks for that horizon first.

Is it better to rent or buy a house?

The honest answer is that it depends mainly on how long you will stay, and secondarily on your local price-to-rent ratio, your mortgage rate, and what else you would do with the money. There is no single right answer, which is exactly why a calculator beats a rule of thumb.

Buying usually wins when: you will stay long enough (commonly five or more years) for equity and appreciation to overcome the upfront costs; the local price-to-rent ratio is low, meaning homes are cheap relative to rents; you want stability and control over your space; and you value the forced savings that a mortgage provides.

Renting usually wins when: you may move within a few years; you live in an expensive market where prices are high relative to rents; you would invest the difference rather than spend it; or you place a premium on flexibility and freedom from maintenance. Renting is not "throwing money away" any more than buying groceries is, you are paying for a place to live with none of the risk, illiquidity, or transaction costs of ownership.

The practical path is to enter your real numbers above, find the year at which buying overtakes renting, and compare that break-even to how long you honestly expect to stay. If your expected stay is comfortably beyond the break-even, buy; if it is shorter or uncertain, renting is often the safer financial choice.

Why your time horizon decides it

The length of time you stay in a home is the single most powerful factor in the rent-versus-buy decision, more important than the interest rate, the price, or even the market. This is because buying front-loads a large pile of costs that only pay off if you stay long enough to spread them out.

When you buy, you pay closing costs of 2 to 5 percent going in and selling costs of 6 to 8 percent coming out. On top of that, the early years of a mortgage are almost entirely interest, so you build very little equity at first. Sell after two or three years and those transaction costs and interest payments can easily exceed everything you would have "wasted" on rent. Stay seven, ten, or fifteen years, and equity plus appreciation pull decisively ahead.

This is the origin of the common "five-year rule," the rough idea that you should plan to stay at least five years to make buying worthwhile. It is only a starting point; the true break-even might be three years in a cheap, fast-appreciating market or eight years in an expensive one. The calculator finds your specific break-even, but the mindset to carry in is simple: the longer you will stay, the more buying makes sense.

The price-to-rent ratio explained

The price-to-rent ratio is the fastest way to read whether a market is priced for owners or renters, and it is the backbone of the state-by-state table below. You calculate it by dividing the price of a home by the annual rent for a comparable one:

Price-to-rent ratio = home price ÷ (monthly rent × 12)

A $360,000 home that rents for $1,800 a month has a ratio of 360,000 ÷ 21,600 = 16.7. The interpretation is straightforward:

• Under 15: homes are inexpensive relative to rents, and buying tends to win. Owning often costs little more than renting while building equity.
• 15 to 20: a balanced zone where the answer depends on your time horizon, rate, and personal situation.
• Over 21: homes are expensive relative to rents, and renting tends to win unless you stay a very long time or expect strong appreciation.

The ratio is a quick screen, not a full verdict, it ignores your specific rate, down payment, and how long you will stay. But it tells you instantly which way a market leans, and it explains why buying is an easy call in much of the Midwest and a hard one on the coasts.

Rent vs buy by state: a full US comparison

Whether renting or buying wins depends heavily on where you live, because home prices and rents vary enormously across the country. The table below covers all 50 states with a representative median home price, a representative median monthly rent, the resulting price-to-rent ratio, and which way each state leans. These are representative figures for illustration, not live quotes, use them to see the pattern, then run your own numbers above for a specific home.

A clear geography emerges. Lower-priced states in the Midwest and South, Illinois, Ohio, Louisiana, Mississippi, West Virginia, tend to have low price-to-rent ratios where buying is the stronger financial move. High-cost coastal and mountain-west states, California, Hawaii, Washington, Colorado, Utah, Idaho, carry high ratios where renting frequently wins unless you stay for many years. Most states land in the balanced middle, where your personal time horizon is the deciding factor. Wherever you are, the state figure is a starting point; your neighborhood, your rate, and your length of stay move the real answer.

Rent vs buy in expensive cities like NYC, San Francisco, and Chicago

Big cities deserve their own discussion because their extreme price-to-rent ratios often flip the usual advice. In the most expensive markets, renting can be the financially smarter choice even for people who stay a long time.

New York City and San Francisco have some of the highest price-to-rent ratios in the country, frequently above 25 and sometimes far higher in prime neighborhoods. At those levels, the cost of owning, mortgage, sky-high property taxes or co-op fees, and maintenance, can dwarf the cost of renting the same unit, and the money saved by renting and invested can outperform home appreciation. Many financially comfortable New Yorkers rent by choice, not necessity.

Chicago tells the opposite story among big cities. Illinois has a relatively low price-to-rent ratio, so despite Chicago's high property taxes, buying is often competitive with or better than renting for anyone staying more than a handful of years. It is a reminder that "big city" does not automatically mean "rent," the ratio matters more than the reputation.

If you are weighing a specific city, plug the local price and rent into the calculator. High-cost cities usually push the break-even out to eight, ten, or more years; moderate-cost cities can bring it back under five. The city's ratio tells you which pattern to expect.

The hidden and upfront costs of buying

The reason renting can beat buying, even though rent "builds no equity," is that ownership carries a stack of costs that never appear on a mortgage statement. A fair comparison has to count all of them.

• Closing costs: 2 to 5 percent of the price, paid upfront, lender fees, title, appraisal, and prepaids.
• Selling costs: 6 to 8 percent when you leave, mostly agent commissions, which quietly erase a chunk of your appreciation.
• Property taxes: ongoing and rising, and dramatically higher in some states and cities than others.
• Homeowners insurance: required by lenders and climbing in many regions.
• Maintenance and repairs: budget about 1 percent of the home's value per year; a roof, furnace, or foundation can cost far more in a single year.
• HOA dues: common for condos and many newer developments, and they only go up.
• Opportunity cost: the down payment is cash that could have been invested elsewhere.

None of this means buying is a bad deal, over a long enough horizon, equity and appreciation typically overwhelm these costs. But leaving them out is the most common mistake people make, and it makes buying look better than it is for short stays. The calculator above includes them so your comparison is honest.

The costs and trade-offs of renting

Renting has its own economics, and they are not as one-sided as "you are throwing money away" suggests. A complete comparison respects what renting actually offers and costs.

On the cost side, renters face rising rent, which can climb faster than a fixed mortgage payment stays flat, and over decades that difference compounds. Renters build no equity and capture no appreciation, so they miss the primary wealth-building engine of ownership. They also have less control, a landlord can raise the rent, sell the property, or decline to renew.

On the benefit side, renting delivers flexibility (you can move with little cost), predictability (no surprise $12,000 roof), and liquidity (your savings stay invested rather than locked in a house). The often-overlooked advantage is that opportunity cost: a disciplined renter who invests the down payment and the maintenance savings can, in expensive markets, come out ahead of an owner. The key word is disciplined, the strategy only works if the money is actually invested rather than spent.

The takeaway is that renting is a legitimate financial choice, not a failure to buy. In the right market and time horizon, it wins outright.

How mortgage rates change the rent vs buy math

Your mortgage rate has a large effect on the rent-versus-buy answer because it drives the biggest ongoing cost of owning. When rates are low, more of every payment goes to principal, the monthly cost is lower, and buying wins sooner, sometimes making ownership cheaper than renting from year one. When rates are high, payments are dominated by interest, the monthly cost of owning rises, and the break-even horizon stretches out.

This is why the same home can favor buying at a 4 percent rate and favor renting at a 7 percent rate. A two-percentage-point difference can add hundreds of dollars to the monthly payment and push the break-even several years further out. It also explains why rent-versus-buy advice shifts with the rate environment, in a low-rate era buying is an easy call, and in a high-rate era renting-and-waiting becomes reasonable for many buyers.

One nuance worth remembering: rates are not permanent. If you buy at a high rate, you may be able to refinance later if rates fall, which improves the buying case beyond what today's rate suggests. You can model that future payment with our refinance calculator. Test a few rate scenarios in the calculator above to see how sensitive your break-even is.

Does buying really build wealth better than renting?

Over long periods, owning a home has been one of the most reliable ways ordinary households build wealth, but the reasons are more subtle than "renting is throwing money away," and they do not hold in every market.

Ownership builds wealth through three channels. First, forced savings: every mortgage payment pays down principal, converting spending into net worth in a way that requires no willpower. Second, appreciation on leverage: because you control a whole home with a small down payment, even modest price growth produces a large return on your invested cash. Third, a fixed mortgage payment while rents rise means your housing cost effectively falls over time.

But the wealth advantage is not automatic. In very expensive markets, a disciplined renter who invests the down payment and the ownership-cost savings in stocks can match or beat a homeowner, because the home's high price limits its percentage appreciation and the ownership costs are steep. The homeowner's edge is strongest in affordable markets with reasonable appreciation, and weakest in expensive ones. The honest summary: buying builds wealth better for most people in most markets, largely through forced savings, but it is not a guarantee, and the renter-who-invests is a real alternative, not a myth.

Rent vs buy in 2026: what today's market means

The rent-versus-buy calculus shifts with the market, and the current environment has specific features worth understanding. After the low-rate years, mortgage rates have settled well above the rock-bottom levels of the early 2020s, which raises the monthly cost of owning and pushes break-even horizons longer than they were a few years ago.

At the same time, home prices in most markets remain elevated, keeping price-to-rent ratios high in coastal and mountain-west states. Rents have also risen, which works in the other direction, higher rents make owning relatively more attractive by raising the cost of the renting alternative. The net effect varies sharply by region: buying remains a clear win across much of the affordable Midwest and South, while renting holds an edge in the priciest metros.

The practical guidance for today's market is to lengthen your assumed time horizon and to run the numbers with a realistic, current rate rather than a hopeful low one. If your break-even lands within the time you plan to stay even at today's rate, buying is sound, and any future refinance is upside. If it does not, renting while you save a larger down payment is a perfectly rational choice. Use current figures in the calculator rather than dated assumptions from a different rate era.

How to choose the best rent vs buy calculator

Search results are full of rent vs buy calculators, from the New York Times to Zillow to NerdWallet, and they are not all equally rigorous. Knowing what separates a good one from a shallow one helps you trust the answer, and shows why this one is built the way it is.

The best rent vs buy calculators share a few traits. They include the opportunity cost of the down payment, crediting renters with investment returns on the cash they did not spend. They account for both closing costs going in and selling costs coming out. They let you set your own time horizon and appreciation rather than hiding those assumptions. And they present a clear break-even, the year at which buying overtakes renting, rather than a single yes/no.

Weak calculators do the opposite: they compare only the monthly rent to the monthly mortgage payment, ignore transaction costs, and produce a falsely rosy picture of buying. If a tool tells you buying wins without ever asking how long you will stay, it is not giving you a real answer.

This calculator is designed around the honest version of the comparison, it nets all the costs of owning against renting over the horizon you choose, and it is free, private, and requires no personal information. Pair it with our pre-approval calculator to confirm affordability once you lean toward buying.

NYT, Zillow, NerdWallet, and Excel: comparing the popular tools

Because several well-known rent vs buy calculators dominate search, it helps to know how they differ and where each is strongest.

• The New York Times calculator is widely regarded as the most thorough, it lets you adjust dozens of assumptions including investment return, and it frames the result as an equivalent monthly rent. Its depth is its strength and, for some, its complexity.
• Zillow's calculator is simple and visual, good for a quick read tied to real listings, but lighter on the opportunity-cost and investment-return side.
• NerdWallet's calculator sits in the middle, clean and approachable with a solid cost breakdown.
• An Excel or Google Sheets model gives you total control, you can build every assumption yourself, which is ideal if you want to see the mechanics, though it takes effort and is easy to get wrong.
• Reddit threads (in communities like r/personalfinance and r/realestate) are not calculators but are a useful sanity check on real-world costs and regional experience.

The common thread among the good ones is that they all count total cost, not just the monthly payment, and they all treat the down payment's opportunity cost seriously. This calculator follows the same principles in a fast, private, no-signup format, so you can get a rigorous answer without exporting a spreadsheet or handing over your email.

The 5% rule for renting vs buying

A popular shortcut for the rent-versus-buy decision is the 5% rule, a quick way to estimate the true annual cost of owning and compare it to rent. The idea is that owning a home costs roughly 5 percent of its value per year in unrecoverable costs, split three ways: about 1 percent for property taxes, about 1 percent for maintenance, and about 3 percent for the cost of capital (mortgage interest plus the opportunity cost of your down payment).

To use it, multiply the home price by 5 percent and divide by 12 to get a monthly "cost of owning" figure. If a $360,000 home yields 360,000 × 0.05 = $18,000 a year, or $1,500 a month, then renting an equivalent home for less than $1,500 favors renting, and renting for more than $1,500 favors buying. The 5 percent captures the money you never get back, so it is a fairer comparison than mortgage payment versus rent.

Like the price-to-rent ratio, the 5% rule is a screen, not a final answer, your actual rate, tax rate, and appreciation will move it. But it is a fast, memorable gut check, and it usually points the same direction as a full calculation. When the rule and the calculator agree, you can be confident in the call.

When renting is the smarter financial choice

It is worth stating plainly, because the culture pushes so hard toward buying, that renting is sometimes the objectively better financial decision, not a compromise. Here are the situations where renting wins.

• You might move within a few years. Short stays rarely recover the transaction costs of buying and selling.
• You live in a high price-to-rent market. When ratios exceed 21, owning often costs far more than renting the same home.
• You would invest the difference. A disciplined renter who invests the down payment and cost savings can build comparable wealth, especially in expensive markets.
• Your income or location is uncertain. Flexibility has real value when a job or life change could force a move.
• You are not ready for maintenance risk. Renting caps your housing cost; owning exposes you to five-figure surprises.
• Buying would drain your emergency savings. Being house poor with no reserves is riskier than renting comfortably.

Recognizing these cases protects you from buying at the wrong time out of social pressure. The calculator will confirm the math, but if several of these describe you, expect renting to come out ahead, and that is a smart outcome, not a setback.

When buying makes the most sense

On the other side, buying is the stronger move in a clear set of circumstances, and when several of them line up, the decision is easy.

• You will stay put for many years. Time is what turns ownership's upfront costs into long-run gains.
• You live in an affordable, low price-to-rent market. Much of the Midwest and South rewards buyers quickly.
• You want stable, predictable housing costs. A fixed mortgage payment shields you from rising rents.
• You value forced savings. A mortgage builds equity automatically, which suits people who do not reliably invest on their own.
• You want control and permanence. Renovating, having pets, and staying as long as you like are ownership privileges.
• You have stable income and healthy reserves. Buying is safest when it does not stretch your budget or empty your savings.

When your expected time in the home comfortably exceeds the break-even the calculator shows, and your finances are steady, buying typically builds more wealth and delivers more security than renting. Confirm the payment fits your budget with our mortgage calculator and check your borrowing power with the DTI calculator before you commit.

Common mistakes in the rent vs buy decision

A handful of errors lead people to the wrong conclusion, and each is easy to avoid once you know it.

• Comparing rent to only the mortgage payment. This ignores taxes, insurance, maintenance, and transaction costs, and makes buying look far better than it is.
• Assuming rent is "wasted" money. Rent buys housing with no risk or transaction cost; it is a service, not a loss.
• Overestimating appreciation. Betting on rapid price growth to justify a purchase is risky; use a conservative rate.
• Ignoring the opportunity cost of the down payment. That cash could be invested; a fair comparison credits renters for it.
• Underestimating how long they will really stay. Life changes; if there is a real chance of moving soon, weight that heavily.
• Forgetting selling costs. The 6 to 8 percent it costs to sell can erase years of appreciation.

Avoiding these keeps your decision grounded in total cost over your real time horizon, which is exactly what the calculator models. When you enter honest, complete numbers, the answer it gives is one you can act on with confidence.

The tax side of buying vs renting

Taxes are often oversold as a reason to buy, so it helps to see clearly what they do and do not add. Homeowners can potentially deduct mortgage interest and property taxes, which lowers the after-tax cost of owning. In the early years of a mortgage, when payments are mostly interest, these deductions can be meaningful for higher earners in expensive homes.

But the benefit is smaller than many assume, for two reasons. First, the standard deduction is now large, so most households take it and get no additional benefit from itemizing their mortgage interest at all. Second, the deduction for state and local taxes, which includes property taxes, is capped, limiting the write-off in high-tax states. The upshot is that only some buyers, typically those with large mortgages or high incomes who itemize, capture a real tax advantage.

Renters, meanwhile, have no housing tax deduction, but they also carry none of the costs those deductions partially offset. A fair rent-versus-buy comparison treats the tax benefit as a modest reducer of ownership cost for those who itemize, not as a decisive factor. Do not let the promise of a tax break drive the decision; run the numbers with and without it and consult a tax professional for your specific situation.

Invest the difference: the renter's counterstrategy

The strongest financial argument for renting is the invest-the-difference strategy, and understanding it makes you a better decision-maker whichever path you choose. The idea is simple: buying ties up a large down payment and adds ongoing costs beyond rent; a renter who invests that down payment and the monthly savings in the stock market can build wealth that rivals or beats a homeowner's equity, especially in expensive markets.

The math works because of two forces. First, in high price-to-rent markets, owning costs much more per month than renting, leaving a large sum to invest. Second, long-run stock market returns have historically been strong, and unlike a home, a diversified portfolio is liquid and requires no maintenance. A renter in San Francisco who invests the difference can plausibly out-accumulate a buyer over a decade.

The catch, and it is a big one, is discipline. The strategy only works if the renter actually invests the difference every month rather than spending it. In practice, a mortgage's forced savings beats good intentions for most people, which is why buying builds wealth better on average even when renting-and-investing wins on paper. If you are a disciplined, automatic investor in an expensive market, renting may be your best move; if you are not, ownership's forced savings is a feature, not a bug.

Break-even examples: when buying overtakes renting

Nothing clarifies the decision like seeing the break-even year across different scenarios. The table below shows roughly how many years you need to stay for buying to beat renting, given a market's price-to-rent ratio and mortgage rate. These are illustrative, your exact break-even depends on your down payment, appreciation, and costs.

The pattern is unmistakable: affordable markets reward buyers in just a few years, while expensive markets demand a long commitment, and higher rates push every break-even further out. Compare the break-even for your market to how long you truly expect to stay. If your horizon clears the break-even with room to spare, buy; if it is close or shorter, renting is the safer bet. Enter your own figures above to pin down the exact year for your situation.

Rent vs buy for your life stage and situation

The right answer shifts with your circumstances, and it helps to see how the decision changes for common situations.

• First-time buyers: often stretched on the down payment and uncertain about how long they will stay. Renting while saving a larger down payment is frequently wise unless you are confident in a multi-year stay in an affordable market.
• Young singles and couples: mobility matters more when careers are in flux. Flexibility often tips the scale toward renting until location and income stabilize.
• Growing families: stability, school districts, and space favor buying, and families tend to stay longer, which helps the math clear the break-even.
• Military and frequent movers: with relocations every few years, the transaction costs of buying and selling rarely pay off; renting usually wins, though VA loans and strong rental markets can change the calculus.
• Retirees: the choice hinges on liquidity and mobility. Some downsize and buy for stability; others rent to free up equity and avoid maintenance.

Your life stage is really a proxy for two things the calculator already uses: how long you will stay and how much you value flexibility. Map your situation onto those, then let the numbers confirm the direction.

Regional patterns: why the Midwest buys and the coasts rent

Zoom out to the whole country and a clear regional map appears, driven almost entirely by the price-to-rent ratio. Understanding it helps you calibrate expectations before you even run the numbers.

The Midwest and much of the South, states like Ohio, Illinois, Indiana, Missouri, Kentucky, Louisiana, and Mississippi, combine modest home prices with solid rents, producing low price-to-rent ratios. In these markets, owning often costs about the same as renting month to month while building equity, so buying wins quickly, sometimes in just two or three years. For most people in these regions, buying is the default financially sound choice.

The coasts and mountain west, California, Washington, Oregon, Hawaii, plus Colorado, Utah, Idaho, and Montana, carry high prices relative to rents. Ratios above 22 or 25 are common, which means owning costs far more per month than renting the same home, and the break-even stretches to eight, ten, or more years. In these markets renting is a legitimate long-term strategy, especially paired with disciplined investing.

Most of the country sits in the balanced middle, where the decision genuinely depends on your personal time horizon. Wherever you are, use the regional pattern as a prior, then let the state table and your own inputs sharpen it into an answer for your specific home.

Building your own rent vs buy model in Excel

Some people want to see every gear turning, and building a rent-versus-buy model in Excel or Google Sheets is a great way to understand the mechanics, even if you ultimately trust this calculator for the answer. Here is the structure of a sound spreadsheet.

Create a row for each year you might stay. In the buying columns, track the mortgage balance (declining as you pay principal), the home value (growing at your appreciation rate), annual costs (interest, taxes, insurance, maintenance, HOA), and cumulative equity. Add the upfront down payment and closing costs at year zero and selling costs at the year you exit. In the renting columns, track annual rent (growing each year), renters insurance, and the growing value of the down payment invested at an assumed return.

Each year, compare the owner's net position (equity minus the cumulative extra costs of owning) to the renter's net position (invested savings). The first year the owner's number exceeds the renter's is your break-even. Building this yourself reveals how sensitive the answer is to appreciation and investment-return assumptions, which is exactly why honest calculators expose those inputs. If you would rather skip the spreadsheet, the calculator above runs the same logic instantly and privately.

A simple rent vs buy decision checklist

When the numbers are close, a structured checklist keeps the decision grounded. Run through these questions before you commit either way.

• How long will I really stay? Be honest about job, family, and lifestyle changes. If under five years is plausible, lean rent.
• What is the local price-to-rent ratio? Under 15 leans buy; over 21 leans rent.
• Does the payment fit comfortably? Keep housing near 25 to 28 percent of gross income; confirm with the DTI calculator.
• Will I still have an emergency fund after buying? Do not drain reserves for a down payment.
• Am I ready for maintenance? Both the money and the responsibility.
• Would I actually invest the difference if I rented? If not, buying's forced savings helps you.
• Does the break-even fit my horizon? Let the calculator confirm the year and compare it to your plan.

If most answers point one direction, you have your answer. If they are split, the financial edge is probably small, and lifestyle factors, stability versus flexibility, can be the tiebreaker without much cost either way.

Rent vs buy glossary

A quick reference to the terms behind the rent-versus-buy decision.

• Price-to-rent ratio: home price divided by annual rent; under 15 favors buying, over 21 favors renting.
• Break-even horizon: the number of years you must stay for buying to beat renting.
• Opportunity cost: the investment return you give up by tying cash in a down payment instead of investing it.
• Equity: the share of the home you own, built through principal payments and appreciation.
• Appreciation: the increase in a home's value over time.
• Closing costs: upfront buying costs, roughly 2 to 5 percent of the price.
• Selling costs: the roughly 6 to 8 percent it costs to sell, mostly agent commissions.
• The 5% rule: a shortcut estimating annual ownership cost at about 5 percent of the home's value.
• Forced savings: the automatic wealth-building of paying down a mortgage.
• PITI: principal, interest, taxes, and insurance, the core components of a mortgage payment.

Frequently Asked Questions

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