Rent vs. Buy: The Complete Guide

The rent vs. buy decision is one of the biggest financial choices you’ll make. Our calculator factors in all the hidden costs — closing costs, maintenance, property taxes, insurance, HOA, tax deductions, home appreciation, rent increases, and the opportunity cost of your down payment.

When Buying Makes Sense

• You plan to stay 5+ years (the longer, the more buying wins).
• Home prices in your area are appreciating faster than inflation.
• Your mortgage payment (PITI) is comparable to or less than local rent.
• You can take advantage of mortgage interest tax deductions.

When Renting Might Be Better

• You might move within 3-5 years (transaction costs eat equity).
• Rent is significantly cheaper than buying in your market.
• You value flexibility and don’t want maintenance headaches.
• You can invest your down payment savings for higher returns elsewhere.

The 5% Rule

A useful shortcut: unrecoverable costs of homeownership (property tax ~1%, maintenance ~1%, mortgage interest, HOA) total roughly 5% of home value per year. If annual rent is less than 5% of the home price, renting may be cheaper. If rent exceeds 5%, buying likely wins long-term.