Is buying a home worth it vs. renting?
Five years of owning — mortgage, taxes, insurance, upkeep, closing costs — against five years of rent, with the equity you'd build subtracted out.
Your numbers
The verdict
Assumes a 30-year mortgage, ~3% closing costs, ~2.6%/yr of home value for taxes, insurance and upkeep, and ~6% selling costs. Estimates for education only — not financial advice.
Why "renting is throwing money away" is wrong
The phrase assumes every dollar of a mortgage payment builds wealth. It doesn't. In the early years of a 30-year mortgage, the large majority of each payment is interest — money gone, exactly like rent. Add property taxes, insurance, maintenance, and the closing costs you pay on the way in and the realtor commission you pay on the way out, and a meaningful share of ownership spending never becomes equity.
That's what this calculator measures. It totals five years of real ownership costs, then subtracts the equity you'd actually walk away with after selling. Whatever's left is the true cost of owning, and that's the number worth comparing to rent.
What the model assumes
- Carrying costs of about 2.6% of home value per year. That bundles property tax, insurance, and maintenance. It varies a lot by state — Florida and Texas run higher, and older homes need more upkeep.
- Closing costs around 3% when you buy, and about 6% in selling costs when you leave.
- Appreciation and rent growth are your inputs. Nobody knows future numbers, so try a pessimistic case: set appreciation to 0% and see whether buying still holds up. If it does, the decision is robust.
- Investment returns aren't modeled. A renter who invests the down payment could earn on it — a real advantage this calculator leaves out, which makes its verdicts slightly generous to buying.
The things numbers can't price
Owning means you can't be told to leave when the lease ends, you can paint the walls, and your housing cost stops rising once the mortgage is fixed. Renting means a broken water heater is a phone call rather than a bill, and a new job in another city is a thirty-day notice rather than a sale. Neither is a rounding error. Run the math first, then decide how much those are worth to you.
Common questions
Is a bigger down payment always better?
It lowers your payment and can eliminate mortgage insurance, but it also drains savings. Being house-rich and cash-poor is how a manageable repair becomes a crisis. Keep an emergency fund intact.
Should I wait for rates to drop?
Nobody reliably times rates. What matters more is whether the payment fits your budget today. If rates fall later, refinancing is an option; if prices rise while you wait, that gain is gone.
What if I rent out a room?
That income can flip the math substantially. Subtract expected rental income from your monthly cost and rerun the comparison — but be conservative about vacancy.