How this calculator compares renting and buying
Comparing rent to a mortgage payment is not enough, because part of every mortgage payment builds equity, the home may gain value, and owning comes with costs a renter does not pay, like property tax, maintenance and the cost of selling later. This calculator follows both paths month by month.
If you buy, your result is what the home would sell for after selling costs, minus what you still owe on the loan. If you rent, the cash you would have used for the down payment and closing costs stays invested instead. In any month where one path costs less, the difference is saved and invested for that side, so both sides spend the same total amount and the comparison stays fair.
Rent vs buy questions
Is it better to rent or buy a house?
It depends mostly on how long you plan to stay. Buying has large upfront and selling costs, so it usually needs several years to pull ahead of renting. High property taxes or insurance lengthen that break-even time, while steady rent increases shorten it. Run your own numbers, because your rent, price and down payment change the answer.
How long do I need to stay for buying to make sense?
Many buyers break even somewhere between three and seven years, but it can be shorter or longer. A low down payment, high interest rate or slow home value growth push the break-even later, while rising rents and a longer stay favor buying. The calculator shows the first year buying comes out ahead for your numbers.
Why doesn't the calculator include the mortgage interest tax deduction?
Since the 2017 tax law roughly doubled the standard deduction, most homeowners no longer itemize, so they get no extra tax benefit from mortgage interest. Including it would make buying look better than it is for most buyers.
What costs of owning a home do renters not pay?
Owners pay property tax, homeowners insurance, maintenance and repairs, any HOA dues, mortgage insurance on many low down payment loans, and closing costs when buying and selling. Renters usually pay only rent and renter's insurance, which is why owning often costs more each month at first even when it builds more wealth over time.
Can I buy with a low down payment instead of saving 20%?
Yes. FHA allows 3.5% down with a 580 credit score, many conventional loans allow 3% to 5% down, and VA allows 0% down for eligible borrowers. Many states and cities also offer down payment assistance programs. A smaller down payment means mortgage insurance and a larger loan, which this calculator includes.
Sarah Baraz is based in San Antonio and licensed in Texas, Florida and California. Educational estimate only, not financial, tax or investment advice, and not a loan offer, rate quote or commitment to lend. Home values, rents, investment returns and costs can rise or fall and are not guaranteed. The example rate is Freddie Mac's Primary Mortgage Market Survey national average for the week shown and is not available to every borrower.