Rent vs. Buy Calculator

The rent vs. buy calculator will allow you to consider the other payments that you are going to have to make if you own a property. These types of fees include taxes, insurance, and other homeowner fees to see if owning a home is the right financial decision for you.

By changing any value in the following form fields, calculated values are immediately provided for displayed output values. Click the view report button to see all of your results.

Your home purchase breaks even in approximately 6.3 years.

*This entry is Required. indicates required.

Mortgage and Home Expenses:

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Monthly house payment: $1,398.56

Purchase price:*This entry is Required.Enter an amount between $0 and $250,000,000

Interest rate:*This entry is Required.Enter an amount between 0% and 25%

Term in years:*This entry is Required.

Monthly PMI:*This entry is Required.Enter an amount between $0.00 and $1,000.00

Loan amount:

$204,898

Monthly payment (PI):

$1,038.19

Property tax rate:*This entry is Required.Enter an amount between 0% and 20%

Home insurance:*This entry is Required.Enter an amount between 0% and 10%

Assoc. & maintenance fees:*This entry is Required.Enter an amount between -$10,000 and $10,000

Report amortization:

Report amortization

Annually

Monthly

Down Payment and Closing Costs:

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Total closing costs: $4,898

Rent, Taxes and Inflation:

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Monthly rent payment: $750

Filing Status and Federal Income Tax Rates 2019^*
Tax Rate	Married Filing Jointly or Qualified Widow(er)	Single	Head of Household	Married Filing Separately
^*Caution: Do not use these tax rate schedules to figure 2018 taxes. Use only to figure 2019 estimates. Source: Rev. Proc. 2018-57
10%	$0 - $19,400	$0 - $9,700	$0 - $13,850	$0 - $9,700
12%	$19,400 - $78,950	$9,700 - $39,475	$13,850 - $52,850	$9,700 - $39,475
22%	$78,950 - $168,400	$39,475 - $84,200	$52,850 - $84,200	$39,475 - $84,200
24%	$168,400 - $321,450	$84,200 - $160,725	$84,200 - $160,700	$84,200 - $160,725
32%	$321,450 - $408,200	$160,725 - $204,100	$160,700 - $204,100	$160,725 - $204,100
35%	$408,200 - $612,350	$204,100 - $510,300	$204,100 - $510,300	$204,100 - $306,175
37%	Over $612,350	Over $510,300	Over $510,300	Over $306,175

**FIG_GRAPHTITLE** Line Graph: Please view the report to see detailed calculation results in tabular form.

Home Equity vs. Investment

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**FIG_GRAPHTITLE** Column Graph: Please view the report to see detailed calculation results in tabular form.

Monthly Payment Breakdown

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**FIG_GRAPHTITLE** Column Graph: Please view the report to see detailed calculation results in tabular form.

10 Year Projected Monthly Payments

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Get your Rates!

Definitions

Price of home

Purchase price of the home you wish to buy.

Interest rate

The current interest rate you expect to receive on your mortgage. Please note that the interest rate is different from the Annual Percentage Rate (APR), which includes other expenses such as mortgage insurance, and the origination fee and or point(s), which were paid when the mortgage was first originated. The APR is normally higher than the simple interest rate.

Term in years

The number of years over which you will repay this loan.

Monthly PMI

Monthly cost of Private Mortgage Insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.5% of your loan balance each year.

Loan amount

Calculated amount of the loan for this home purchase.

Monthly payment (PI)

Monthly principal and interest (PI) payment.

Property tax rate

Your property tax rate. 1% for a $100,000 home equals $1,000 per year in property taxes.

Home insurance rate

Your homeowner's insurance rate. 0.5% for a $100,000 home equals $500 per year for homeowner's insurance.

Assoc. & maintenance fees

Any association fees you are required to pay per month with the ownership of this home. Also include any other maintenance costs you expect to incur with the ownership of this home that you are not paying while you continue to rent.

Cash on hand

Cash you have for the down payment and closing costs.

Loan origination rate

The percentage the lending institution charges for its origination fee. 1% for a $100,000 home equals $1,000.

Points paid

The total number of points paid to reduce the interest rate of your mortgage. Each point costs 1% of your mortgage balance.

Other closing costs

Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other miscellaneous fees paid.

Total for down payment

Total funds remaining for down payment.

Monthly rent payment

Amount you currently pay for rent per month.

After-tax investment return

The rate of return, after taxes, you could receive if you invested your closing costs and down payment instead of purchasing a home.

The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31^st 2018, had an annual compounded rate of return of 12.1%, including reinvestment of dividends. From January 1, 1970 to December 31^st 2018, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.2% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.

Income tax rate

Your current marginal income tax rate. Use the ‘Filing Status and Federal Income Tax Rates’ table to assist you in estimating your federal tax rate.

Filing Status and Federal Income Tax Rates 2019^*
Tax Rate	Married Filing Jointly or Qualified Widow(er)	Single	Head of Household	Married Filing Separately
^*Caution: Do not use these tax rate schedules to figure 2018 taxes. Use only to figure 2019 estimates. Source: Rev. Proc. 2018-57
10%	$0 - $19,400	$0 - $9,700	$0 - $13,850	$0 - $9,700
12%	$19,400 - $78,950	$9,700 - $39,475	$13,850 - $52,850	$9,700 - $39,475
22%	$78,950 - $168,400	$39,475 - $84,200	$52,850 - $84,200	$39,475 - $84,200
24%	$168,400 - $321,450	$84,200 - $160,725	$84,200 - $160,700	$84,200 - $160,725
32%	$321,450 - $408,200	$160,725 - $204,100	$160,700 - $204,100	$160,725 - $204,100
35%	$408,200 - $612,350	$204,100 - $510,300	$204,100 - $510,300	$204,100 - $306,175
37%	Over $612,350	Over $510,300	Over $510,300	Over $306,175

Expected inflation rate

This is what you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI). From 1925 through 2018 the CPI has a long-term average of 2.9% annually. Over the last 40 years highest CPI recorded was 13.5% in 1980. For 2018, the last full year available, the CPI was 2.2% annually as reported by the Minneapolis Federal Reserve. Inflation rate is used to adjust amounts subject to annual increases. These amounts include rent, insurance and tax payments.

Home value appreciation

Amount you expect your home value to appreciate annually.

Future sales commission

The percent of your home's selling price you expect to pay to a broker or real estate agent when you sell your home.

House payment

Total of principal, interest, taxes and insurance (PITI) and maintenance paid per month for your home. Insurance includes Principal Mortgage Insurance (PMI) and homeowner's insurance.

Initial tax savings

The value of the tax deduction you receive on your mortgage's interest and home's property taxes. For example, if you have $900 in interest and $100 property taxes per month, the value of the tax deduction would be $250 (at a tax rate of 25%). Please consult with a tax professional regarding mortgage interest deductions and your specific situation.

Initial principal payment

Total of principal paid per month on your mortgage.

Net house payment

Your initial house payment minus the value of the tax deduction and principal payment (equity).

Net sales price

Net selling price of your home after subtracting any sales commissions.

Rent vs. Buy Calculator Overview

When it comes to finding a place to live, one of the big questions facing people these days is; should I rent, or should I buy a property? Both options have their benefits; this calculator is designed to help identify the best choice for you.

The majority of the benefits of renting are short-term and therefore appealing to those with a less predictable or secure financial future. By contrast, the benefits of owning a home are long-term and tend to appeal to those whose finances are more established.

Despite the debate, the bottom line is this; money spent on renting doesn’t come back to you in any form. Conversely, when you own a property you are building equity with each payment that you make. Every monthly payment contributes to increasing how much of the property you actually own, and that equity can be very useful in a number of ways.

Why Use The Rent vs. Buy Calculator?

When making the decision whether to rent or buy, there are a plethora of factors to consider. Prominent among these is the mortgage rate you would expect to receive, but there are many more important aspects that should form part of your decision-making process.

Although it is usually more beneficial in the long-term, don’t forget that owning a property comes with a lot more financial responsibility than just the mortgage payment. Additionally, if you are not planning to retain the property for a very long time, your investment may suffer if property prices fall at the wrong time.

The Rent vs. Buy Calculator enables you to compare the costs over time of renting and buying, while also considering the extra payments that come hand in hand with owning a property – such as closing fees, taxes and insurance.

How To Use The Rent vs. Buy Calculator

Here's how to get started:

Input the price you are considering paying for a property
Enter the interest rate you expect to pay. If you don’t know, leave the default value there
Choose from the drop-down the number of years over which you expect to repay the mortgage
Specify your property tax rate – this is variable depending on the state you live in
Add the amount you expect to pay each year for home insurance, as a percentage of the property price
If you will be paying association or maintenance fees, add these too
Expand the Down Payment and Closing Costs section, and input the amount of money you have available for these expenses
Provide the relevant information regarding the loan you intend to take out. Your total down payment will calculate automatically
In the Rent, Taxes and Inflation section, add your monthly rent payment and other necessary information
Click "View Report" to see a full breakdown of the costs of renting vs. buying

Who is this Calculator for?

The Rent vs. Buy Calculator is most useful if you:

Are trying to decide whether it is the right time to buy a property
Want to calculate how many mortgage payments it will take for your home’s equity to reach the same level as your deposit amount
Are interested in knowing the trend that your potential rent and/or mortgage payments will follow over the next ten years.

I think it’s the right time to buy – where do I start?

If you can afford the down payments and the associated fees, then home ownership really makes a lot more sense than renting in the majority of cases. Click the orange Get FREE Quote button above to be taken through a brief questionnaire regarding your circumstances and intentions, and we will match you up with the best mortgage providers in your area completely free of charge! It only takes five minutes of your time!

Why does the monthly rental price increase over time?

This is because the monthly rental prices are subject to inflation, and therefore are likely to rise slightly year on year. Mortgage interest rates are a little less predictable and usually, less volatile.

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