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Rent vs. Buy Calculator

Is it cheaper to rent or to buy? Compare what each choice leaves you with over time, and see the year buying pulls ahead.

Buying vs. renting-
Buying
Renting

The deposit is tied up while you rent and comes back at the end, so it does not earn a return in the meantime.

Assumptions

Leave the tax rate at 0 if you take the standard deduction; set it to your marginal rate only if you itemize. The calculator does not model the standard deduction or the cap on state and local tax deductions. All of these are guesses about the future, so try a range.

Mortgage calculator for this home Buyer closing costs Affordability Virginia tax rates

How the comparison works

The two people start with the same cash. The buyer spends it on the down payment and closing costs. The renter invests it, less the security deposit, and each month whoever has the lower monthly cost invests the difference. The buyer's monthly cost is the loan payment, property tax, insurance, dues and upkeep, less any tax saving; the renter's is rent plus renter's insurance. Rent rises by the rent increase each year, and insurance, dues and upkeep by inflation; property tax and upkeep follow the home's value. Every investment earns the same yearly return, compounded monthly.

The chart compares what each would be worth if the buyer sold the home that month: for the buyer, the sale price less selling costs and the loan balance, plus any savings; for the renter, the investments plus the deposit. The break-even point is the first month the buyer is ahead. Buying tends to win when you stay long enough for appreciation and loan paydown to outrun the closing and selling costs, and when rents are high compared with prices.