Rent vs. Buy Calculator: Should You Rent or Buy a Home?

Use our calculator to make the best decision about renting vs. buying

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How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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How to use our rent vs. buy calculator

If you’re debating between renting or buying a house, our rent versus buy calculator can help. Use our calculator to compare homebuying and renting expenses over time and determine whether you’re ready to apply for a mortgage or if renting is the smarter choice for the time being.

You’ll only need four pieces of information to get a recommendation:

  1. Your current ZIP code (or the ZIP code where you’re interested in living)
  2. Your desired home price
  3. Your desired rent payment
  4. How many years you plan to live in the home

If you don’t know this specific information yet, use our suggestions to help you get started. While your expenses will vary based on your budget and location, we’ve provided estimated costs, based on industry averages and current economic conditions, to give you a clearer idea of what to expect.

Understanding your results

After you’ve entered this information, the calculator will give you a recommendation to either buy or rent, depending on which move makes the most financial sense for the length of time you plan to stay in the home.

You can use the line graph above to compare the costs of buying versus renting over time and get a side-by-side look at the total costs of both options. Our cost breakdown accordion will show you the exact figures that went into calculating both totals if you’re interested in a more detailed look at the total costs.

Calculator assumptions and methodology

Our calculator makes some assumptions about the upfront and recurring costs of both renting and buying to provide you with a recommendation. You can find these details in the calculator’s “advanced options” section. If you’d like, you can change any of them at any time to further personalize your results.

Homebuying info

There are a number of homebuying factors that can affect the rent versus buy calculator’s recommendations, and this section lets you fine-tune the numbers based on the following:

  • Down payment. Your down payment amount will be a percentage of your desired home price. The calculator is preset with a 20% down payment because that’s the gold standard percentage that lenders traditionally prefer. These days, most mortgage programs don’t require you to put down that much, however. Some programs require as little as 3% or 3.5% down.
  • Interest rate. Our calculator uses estimated rates, but check out current mortgage rates to get the most accurate recommendation.
  • Mortgage term. You’ll have a choice between a 30- or 15-year loan term with this calculator. A 30-year term gives you the lowest monthly payment, but a 15-year term will help you save on interest charges if you can afford the higher payment that comes with a shorter term.
  • Property taxes and home insurance. The calculator will estimate property taxes and homeowners insurance based on costs that are common for the ZIP code you entered. If you have exact numbers or percentages for a specific property, you can enter them here.
  • HOA fees. If you’re buying a home in a subdivision controlled by a homeowners association, you’ll enter the monthly dues here.
  • Annual maintenance. As a homeowner, you’re on the hook for maintenance and repairs. A good rule of thumb is to set aside 1% to 4% of the home’s value each year to cover home maintenance expenses.
  • Annual home appreciation. The calculator assumes your house will appreciate at a rate of 3% per year. However, that figure may be much higher or lower depending on local housing market trends. Contact a real estate agent to figure out how quickly homes are appreciating in your area.
  • Cost of selling your home. In this case, our calculator anticipates the traditional, full 6% real estate commission that agents would charge to help you sell your home. However, as a result of a recent legal settlement involving the National Association of Realtors (NAR), sellers can now negotiate these fees.
  • Closing costs. As the buyer, you’ll also typically pay between 2% and 6% of the loan amount toward closing costs, including loan origination fees and home appraisal fees.
  • Investment return rate. This can vary based on the real estate market in your area, but the calculator assumes you’ll get a 3% investment return rate. Contact an experienced real estate agent to learn more about anticipated returns in your market.
  • Inflation. Our calculator assumes a 2% inflation rate. The consumer price index (CPI) tracks current inflation rates to help you access the latest data.
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Tax options

There are a number of tax benefits of homeownership. If you have your tax info handy, you can also add that information to the following rent versus buy calculator fields to get a more accurate picture of the potential costs:

  • Annual income. You’ll want to specify how much you earn before taxes. Be sure to also include the income of any co-borrowers applying for a mortgage with you.
  • Marginal income tax rate. Your tax professional can help you with this question if you don’t know the answer based on your recent tax returns. The Internal Revenue Service (IRS) also lists its tax brackets each year.
  • Average savings and loan tax rate. This field allows the calculator to compare the benefit of keeping your down payment money in a savings account versus investing it in a home, and is preset to 5%.
  • Other tax deductions. If you have any other tax deductions you typically take, such as student loan interest or charitable contributions, you can enter them here. The calculator will assume at least $2,500 of additional deductions.
  • Married. The married box will tell the calculator which standard deduction to choose based on your marital status. Check the box if you’re married and filing taxes jointly with your spouse.

Renting info

This section focuses on rental costs and allows you to tweak the following fields:

  • Rental inflation. If you’re not sure about this, ask a real estate agent who specializes in home rentals in your area. Otherwise, the calculator will assume your rent increases 3% every year.
  • Security deposit: The calculator assumes a one-time payment of $1,500, but security deposits are typically equal to one month’s rent payment.
  • Annual rental insurance. Any premium you pay for renters insurance should be entered here. The calculator suggests an annual $180 premium.

Factors to consider when deciding to rent or buy

One buy vs. rent calculator can’t make the decision for you. You’ll need to weigh several factors to determine whether buying or renting a home makes more financial sense. Here’s a closer look at what you should consider:

Location

Think about where you want to live and what specific details around that location are important to you. Do you want a walkable area with access to public transportation? Does the quality of the school district matter? Can you afford to buy there, or is renting more accessible, as is the case in many high-cost metros?

Longevity

As a general rule, buying makes more sense if you plan on staying in the home long enough to break even on the upfront costs of buying a home. If you’re ready to put down roots, buying could be a good idea. However, if you’d like the ability to move quickly for a new job or other opportunity, renting might be a better option for now.

Financial stability

Aside from the upfront costs of buying a home, there’s also the ongoing costs of homeownership to think about. You’ll have to account for your monthly mortgage payment, utilities, association fees and any maintenance or repair costs.

If you aren’t worried about affording those, you may be ready to buy. On the other hand, if you want your budgeting to be less complex, it might be smarter to continue renting, as your landlord would be responsible for at least some of these expenses.

Personalization

When you own your own home, you’re able to customize it to your tastes. If you like the idea of completing home improvement projects at your leisure, think about buying. If having that option isn’t very important to you, renting may be your best bet.

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