By Bill Lyons | Published on May 23, 2025
TABLE OF CONTENTS

    Rent vs Buy Calculator

    Use the rent or buy calculator below to estimate the costs involved with renting a home or buying one over time.

    Rent vs Buy Calculator
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    Buying
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    Break even
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    Rent Buy
    Initial costs $X,XXX $X,XXX
    Recurring costs $X,XXX $X,XXX
    Opportunity costs $X,XXX $X,XXX
    Net proceeds $X,XXX $X,XXX
    Total $X,XXX $X,XXX

    How the Rent vs Buy Calculator Works

    The rent vs buy calculator can be used to get a clearer picture of whether renting or buying makes the most financial sense. It can be a challenge to understand the true cost of renting a home vs buying one, but the rent vs buy calculator makes it simple. In order to use the calculator, follow these steps:

    Step 1: Input your rental information

    Begin by entering information about your prospective rental. We’ll need to know the monthly rent and security deposit for your property. You can also use the advanced menu to add the monthly cost of your renter’s insurance and how much you expect rent to increase each year.

    If you don’t yet have a rental, you can use your max budget as the estimated cost of your rental. A bit of research can also help you understand how much rents typically increase year-to-year in your area.

    Step 2: Input your purchase information

    Next, it’s time to input information about the property you’re thinking about buying. To calculate the cost of owning, add the basic information about the property and your mortgage, including the purchase price of the property, your down payment, the interest rate on your loan, and your loan term.

    If you don’t yet have a mortgage, it’s fine to estimate here. It may be useful to try a few different mortgage scenarios to see which may have the most beneficial outcome. The rent versus buy calculator isn’t a commitment; it’s simply an exercise to help you better understand financial outcomes.

    Then, you can use the advanced menu to add additional information including:

    • Closing costs
    • Property tax rate
    • Annual homeowners insurance
    • Monthly HOA fees
    • Mortgage insurance
    • Monthly utility costs
    • Estimated annual maintenance costs
    • Estimated home appreciation rate

    The more of this information you’re able to include, the more accurate the results of your calculation will be.

    Step 3: Input your personal information

    Finally, tell us a bit of information about yourself, including your tax filing status and average investment return rate, the amount you earn each year from investments, interest, and more. This can help us better understand the estimated tax cuts you may have if you purchase the home and give us a clearer picture of the cost and benefit of each scenario.

    Step 4: Calculate

    When you’ve entered all relevant information, press calculate to get your results. Within a few moments, you’ll have a clearer picture of whether it makes more sense to rent or buy.

    Why Use the Rent vs Buy Calculator?

    When you use the rent or buy calculator, you’ll end up with an easy-to-understand picture of the true costs of renting or buying a home. We won’t simply tell you “buy” or “rent.” Instead, we’ll provide in-depth information about the difference between the two.

    First, you’ll be able to see the length of time you’d need to live in a home in order for renting or buying to make sense. For instance, your calculation could say that, if you live in this home for 5 years, renting is the cheaper option, but if you live there for 20 years, buying is the cheaper option. This helps you understand the change in value over time and can be a great tool for future planning.

    A young white couple tours the kitchen of a bright and clean home with their real estate agent. 

    Next, we’ll give you an interactive graph that shows how much you’ll spend each month if renting vs buying, as well as the point at which the two costs break even. You can use this information to determine whether purchasing or renting makes sense. If you expect to move before the breakeven point, it may not make sense to purchase.

    Lastly, the rent or buy calculator will show you the cost breakdown of renting vs buying. This table includes the upfront costs of each scenario, the ongoing costs of each scenario, opportunity cost, and finally the potential profit of your choice. If you rent, the potential profit is only the cost of your security deposit. If you buy, it includes the potential proceeds from selling your home.

    Key Factors to Consider Between Renting and Buying

    Deciding between renting and buying a home is a big choice. To help make your decision, we recommend considering the following factors:

    • Cost: Is buying a home financially feasible for you? The total cost of a home isn’t just the cost of your mortgage. It includes the down payment, property taxes, homeowners insurance, and more. Plus, you’ll need to have money for incidentals like repairs and more.
    • Housing market: How is the housing market generally and where you intend to live? Research home prices in your area. Keep in mind that, regardless of the market, homes in the United States historically tend to appreciate in value, which is reinforced by the fact that house prices rose 4.5% from 2023 to 2024. It’s also a good idea to look at federal interest rates and other factors that can affect your home’s appreciation and your mortgage rates.
    • Longevity: Do you plan on moving somewhere new in the next few years? If so, it may be a better idea to rent for the time being. Buying a home tends to pay off in the long run rather than the short-term, so think about whether you’re ready to settle down in one place.
    • Maintenance: Are you prepared for the responsibility of maintaining your own home? In most cases, owning a home means you’re responsible for the upkeep, repairs, and maintenance. However, the flip side of this is that you’re free to upgrade and renovate the home as you please.

    See If Buying a Home Is Right for You

    When you’re ready to purchase a home, it’s important to find the right mortgage lender. At Griffin Funding, we’re committed to serving our clients with mortgage solutions that work for them. Enjoy unmatched value, favorable terms and rates, flexible underwriting, and more.

    Interested in other tools that help you explore your mortgage options? Explore additional calculators:

    • DSCR Calculator: Ready to purchase an investment property? The DSCR calculator estimates your debt service coverage ratio to help determine if you qualify for a DSCR loan.
    • 2/1 Buydown calculator: A 2/1 buydown can help you save on interest during the first few years of your mortgage. Use this calculator to discover how much you can save.
    • Bank Statement Loan Calculator: See if a bank statement loan might be the right mortgage option for you.
    • VA Loan Calculator: If you’re a veteran or service member, use our VA loan calculator to see how your benefits can help you afford a home.
    • VA Loan Affordability Calculator: Estimate how much home you can afford when using a VA loan.
    • Blended Rate Calculator: Combine rates from multiple loans into a single interest rate so that you can get a better perspective on how much you’re paying in interest.
    • Debt Consolidation Calculator: Use this calculator to see whether a debt consolidation loan may be able to help you save.
    • Mortgage Payoff Calculator: Get a better idea of how making extra payments on your mortgage will impact your loan term and the amount you pay in interest.
    • Biweekly Mortgage Calculator: See what biweekly mortgage payment would look like for you and see if this repayment strategy aligns with your goals.

    Ready to explore your mortgage options? Reach out to Griffin Funding today to get personalized assistance from one of our mortgage specialists, who can help you find a home financing solution that works for your budget.

    Find the best loan for you. Reach out today!

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    Frequently Asked Questions

    Why should I buy a home?

    Although it’s typically a more expensive option than renting, there are so many benefits to homeownership. Buying a home can: 

    • Build equity: Homeownership puts you directly on the path to increasing your equity. As you pay off your mortgage, your equity in your home will grow. Similarly, as your house appreciates in value, your wealth will increase. 
    • Earn tax breaks: There are a number of tax breaks for homeowners. Not only is the interest paid on your mortgage tax deductible, but so are your property taxes and other home-related expenses.
    • Improve your credit: Regular mortgage payments are a great way to improve your credit score. 

    Is renting ever better than owning a home?

    There are few reasons why renting a home may be better than purchasing one. These include: 

    • Lower short-term costs: Renting a home is almost always less expensive than owning a home in the short-term. Making a down payment and paying for property taxes, homeowners insurance, and other costs can make homeownership expensive. 
    • Greater flexibility: When you rent, you aren’t locked in to your home. It’s typically a less complicated process to break a lease than it is to sell a home. 
    • Less responsibility: A homeowner is fully responsible for the upkeep of their home. As a renter, you don’t need to worry about repairs, maintenance, and other incidental costs. 

    Keep in mind that while there are certainly benefits to renting, this route doesn’t help you build equity and grow wealth. Mortgage payments will cease once you’ve reached the end of your loan term, but rent payments never stop. 

    What is a rent-to-own agreement?

    A rent-to-own agreement is a legal agreement between a homeowner and a renter in which the renter is given the option of purchasing the home at an agreed-upon cost in a predetermined time period. The renter is not legally obligated to purchase the home, but they have the option if they decide to do so. 

    Oftentimes, renters in a rent-to-own agreement will pay slightly over market value for their monthly rent with the expectation that the extra payment will go towards the down payment for the home. 

    What is the 5% rule when it comes to renting vs buying?

    The 5% rule is a guideline that states that if the yearly cost of owning a home is less than 5% of the home’s total cost, it’s a financially sound decision. If not, renting may be a better financial choice.
    Bill Lyons

    Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 23 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 11 years in business.