How to use this calculator
- Enter the home price, down payment, mortgage rate and term.
- Add closing costs, ongoing costs of owning, expected appreciation and selling costs.
- Enter comparable rent, rent growth, your expected investment return and how long you’ll stay.
Frequently asked questions
Is it better to rent or buy a home?
It hinges on how long you stay, home price growth and what your money could earn elsewhere. In the example — a $400,000 home or $2,400 a month in rent — buying comes out ahead by $31,325 after 10 years, with buying breaking even in year 7.
How long do I need to stay for buying to make sense?
Long enough for appreciation and paid-down principal to outweigh closing costs, selling costs and interest. Over just 3 years in the example, renting is ahead by $22,334.
How much do mortgage rates matter?
A great deal. At 7.5% instead of 6.5%, renting is ahead by $11,889 after 10 years.
What does “invest the difference” mean?
Both households spend the same each month. The renter invests the down payment and closing costs up front, plus the difference in any month owning costs more than rent; the owner invests whenever rent would have cost more.
Are taxes included?
No. Results are before tax. Mortgage interest and property tax deductions help only if you itemize, and the home-sale exclusion and capital gains tax on investments can shift the result.