Buy Versus Rent Calculator
Use our Buy Versus Rent Calculator to evaluate the financial tradeoffs between buying and renting a home to determine which option makes the most sense for you. Analyze numerous scenarios including annual rent increases and changes in property value. This Buy Versus Rent Calculator factors in all of the expenses associated with home ownership including property tax and insurance plus closing costs when you buy a home, to provide an accurate comparison between home ownership and renting. The calculator also enables you to understand your homeowners equity and profit or loss from buying a property. If you are evaluating if you should rent or buy a home, use the informative calculator to make an informed decision.
Monthly Housing Payments
- Loan Type
Should You Rent or Buy?
Do You Like Short or Long Term Commitments?
Owning a home is usually a long-term financial commitment. Most mortgages are 15-to-30 years in length as compared to most leases which are one year or shorter in length. Additionally, when you own a home you are responsible for major repairs and upkeep which can be significant financial obligations. Renters are not typically required to pay for property repairs or maintenance. People comfortable with long-term commitments and financial responsibility are better suited for owning a home while people seeking flexibility and reduced financial obligation are well suited for renting a home.
Sharing the Upside...and the Downside
Buying a home enables you to participate in the upside if your property value increases as compared to renting which does not offer that opportunity. If the value of the home you are renting increases significantly, 100% of that appreciation goes to property owner instead of the renter. On the other hand, as a renter you are not exposed to the risk that the value of your property declines whereas homeowners could lose a significant amount of money, including all of their down payment, if the value of their home goes down. Although home ownership provides financial rewards when property values go up, that benefit should be balanced against the downside that property values decrease. You can input how much you think your property value will increase and how long you plan to own the property into our Buy Versus Rent Calculator to determine your future equity in the home.
Making the Same Monthly Payment Never Gets Old
If you select a fixed rate mortgage, your monthly payment is set and does not change over the life of the loan. A monthly rent payment, on the other hand, is subject to increase on a yearly basis. Additionally, if you decide to or are forced to leave the property you are renting your new rent may increase significantly. Although a monthly mortgage payment involves greater financial responsibility than a rent payment, it also provides greater certainty and peace of mind. Making the same monthly mortgage payment for up to thirty years may make more financial sense than paying rent increases for thirty years. Use our Buy Versus Rent Calculator to understand the financial impact of paying a fixed monthly mortgage payment in comparison to increasing rent payments over multiple years.
It is About More Than Just Your Mortgage and Rent Payments
When deciding if you should buy a rent a home you should compare your monthly rent payment to more than just your mortgage payment. In addition to making your monthly mortgage payment, home owners are required to pay hazard insurance, property taxes and other potential housing expenses such as homeowners association (HOA) dues and mortgage insurance. Homeowners are also responsible for property maintenance and upkeep costs. Be sure to compare your monthly rent payment to total monthly housing expense and not just a mortgage payment when you are evaluating renting versus buying a home. Our Buy Versus Rent Calculator enables you to compare monthly rent to total monthly housing expense, which provides a more accurate comparison.
More FREEandCLEAR Mortgage Resources
Analyze the financial impact of renting and buying a home in the near term and over the long run when you include all the expenses that go into owning a home including property tax and homeowners insurance
Review the pros and cons of buying versus renting a home to understand what option matches your personal and financial objectives
Determine what size mortgage you can afford based on your monthly rent payment and current interest rates
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