Is renting throwing money away?

No. Rent is the maximum you pay. A mortgage is the minimum. Buying adds property tax, insurance, maintenance (1% of home value/year), HOA fees. A $2,000 mortgage can cost $3,200/month total. If you won't stay 5-7 years, renting is often smarter.

When should I buy instead of rent?

Buy if: You'll stay 7+ years, want control/customization, want fixed payments (rents rise), or want forced savings via equity. Don't buy for FOMO or because 'everyone says so.'

What are the hidden costs of buying?

Closing costs (3-5% of price), property tax (1-2.5%/year), insurance (0.5%/year), maintenance (1%/year), HOA fees, selling costs (6-10%). A $400k home costs $80k+ extra over 5 years.

How long until buying beats renting?

Usually 5-7 years due to 3-5% buying costs and 6-10% selling costs. If home appreciates 3%/year, it takes years to break even on transaction fees. Renting gives flexibility during this period.

Home / Finance / Rent vs Buy Calculator

Rent vs Buy Calculator

The "Rent is throwing money away" myth needs to die. Sometimes renting is smarter. Sometimes buying builds wealth. It depends on the math, not what your parents say. Let's figure it out.

Housing Details

Monthly Rent ($)

Home Price ($)

Down Payment (%)

Mortgage Rate (%)

Years to Stay

🏠 Renting

Total cost over 0 years

🏡 Buying

Total cost over 0 years
Equity: $0

The "Rent is Waste" Myth

You've heard it a million times: "Why pay your landlord's mortgage?" Here's the truth: Rent is the maximum you will pay. A mortgage is the minimum you will pay.

When you rent, a broken dishwasher is a phone call. When you own, it's $800. When you rent, you can move for a new job in 2 weeks. When you own, selling costs 6-10% of the home's value.

💡 Real Talk from David Chen, CFA

Buying a house is often a forced savings account with a terrible interest rate. If you're disciplined enough to invest the difference between rent and a mortgage (into the S&P 500), renting often wins financially. Don't buy just because of FOMO.

The 5-Year Rule

If you aren't going to stay in the house for at least 5-7 years, do not buy.

Why? Closing costs. You pay ~3-5% to buy and ~6-10% to sell. If your house appreciates 3% a year, it takes years just to break even on those transaction costs. Renting gives you flexibility; buying locks you down.

⚠️ Common Mistake: Ignoring the "Phantom Costs"

People calculate Mortgage vs. Rent. That's wrong. You need to calculate: Mortgage + Property Tax + Insurance + HOA + Maintenance (1% of home value/year) vs. Rent. That $2,000 mortgage is actually $3,200/month out of pocket.

When Buying Wins

You plan to stay 7+ years.
You want control (paint walls, renovate kitchens).
You want a fixed monthly payment (rents go up, fixed mortgages don't).
You want forced savings (paying down principal is equity).

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Reviewed by David Chen, CFA

Chartered Financial Analyst

David rents his apartment because he values flexibility over lawn care.