Rent vs. Buy Calculator
Rent vs. Buy: Making the Right Housing Decision
The 5-Year Rule of Thumb
Our calculator shows that buying typically becomes advantageous after 5+ years of ownership. This accounts for:
- Closing costs (2-5% of home value)
- Realtor fees when selling (5-6%)
- Early years of mortgage payments going mostly toward interest
Hidden Costs of Homeownership
Annual Expenses
- Property taxes (1-2% of value)
- Maintenance (1-3% of value)
- Homeowners insurance ($100-$200/month)
One-Time Costs
- Closing costs ($5k-$15k)
- Moving expenses ($1k-$5k)
- Initial repairs/upgrades
When Renting Makes More Sense
- Short-term living situations (under 3-5 years)
- Unstable job markets where relocation may be needed
- High-cost areas where rent is significantly cheaper than mortgage payments
- When you can invest the down payment at higher returns than home appreciation
Pro Tip: The average American homeowner stays in their home for 13 years. If you're not confident you'll stay that long, renting may be the smarter financial move.