Rent vs buy - what's right for you?

Should you rent or buy a home? Use our simple rent vs buy calculator to find out which option is best for you.

If you stay in your home for 4 years, buying is cheaper than renting

You'll save $54 per month and $2,619 in total

TOTAL COSTYEARS$450k$225k$024681012141618202224262830
Your cost breakdown
RENTBUY
Monthly cost$1,031$977
Total cost$49,494$46,875
Good news. Nerdwallet can help you with your goal of buying a home
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How we got here
How to use the Rent vs. Buy Calculator
Behind the scenes (Methodology)
How to use the Rent vs. Buy Calculator

The renting-vs.-buying question is not something that people usually ask and answer just once. This is a decision with many moving parts, and things change: Your down payment savings grow, you consider moving to a cheaper or more expensive area, you’re curious what happens if you spend less on a home, or more.

You’ll need just seven pieces of information to use our Rent vs. Buy Calculator, things you may already know or have been tossing around in your mind:

To make things easy, we made a number of assumptions about other typical costs that factor into this calculation. They’re visible and you can easily change those numbers for a more customized result. You can see, for example, that we assume your security deposit for renting is equal to one month’s rent, and that you’re making a 20% down payment. But again, you can adjust these figures to exactly what applies to you.

The renting-vs.-buying question is not something that people usually ask and answer just once. This is a decision with many moving parts, and things change: Your down payment savings grow, you consider moving to a cheaper or more expensive area, you’re curious what happens if you spend less on a home, or more.

You’ll need just seven pieces of inform...

See all
Behind the scenes (Methodology)

The Rent vs. Buy Calculator uses the everyday costs of renting and buying to compute and refine results.

We included ongoing payments for rent and renter’s insurance and a one-time security deposit.

For home buying, the Rent vs. Buy Calculator considers one-time costs — closing costs and the down payment — and ongoing expenses, like property taxes, an HOA fee, home insurance, and private mortgage insurance, or PMI, which you pay if your down payment is less than 20% on a conventional mortgage. It takes into account typical spending on home renovations and maintenance. Your result assumes you’ll deduct on your taxes the costs for mortgage interest, PMI and property tax, and that your marginal income tax is 25%. You can adjust all of those pre-filled areas.

The Rent vs. Buy Calculator also accounts for the accumulation of equity from mortgage payments and the effect of growth or decline in home prices. It factors in any long-term capital gains and also bakes in the opportunity cost of using savings for a rental deposit and a down payment instead of investing the money.

The Rent vs. Buy Calculator uses the everyday costs of renting and buying to compute and refine results.

We included ongoing payments for rent and renter’s insurance and a one-time security deposit.

For home buying, the Rent vs. Buy Calculator considers one-time costs — closing costs and the down payment — and ongoing expenses, like property taxes, a...

See all

Rent vs. Buy 101

Location

Location counts. Where you choose to live may decide the buy vs. rent question for you. In high-priced real estate markets like San Francisco, renting could be the only affordable option. In addition to home prices and monthly rents, important factors when deciding where to live include safe neighborhoods, good schools, proximity to public transportation, walkability, drive times to work, shopping and recreation. Also consider the supply of rentals or newly built homes: Are they appealing, plentiful and affordable? Style — of a home, an apartment, a town or a neighborhood — plays a role, too.

Intangibles

Some pieces of our decision are not easily quantifiable, but they could be the most important, such as:

Costs of a home purchase

The upfront cost of buying a home is the biggest barrier for many would-be buyers. In addition to a down payment, you’ll need to save for closing costs, which will run you about 3% to 5% of the loan amount.

Costs of owning

You can’t put your wallet away once you’ve solved the buy or rent problem by buying a home. You’ll keep paying mortgage insurance (for a period of time, anyway), property taxes, homeowners insurance and HOA dues (if they apply). And then there are repairs, upkeep and the cost of furnishing and upgrading your new crib.