Rent vs Buy Calculator
| On a $400k house | Monthly | What is inside |
|---|---|---|
| Rent an equivalent | $2,200 | one number, no surprises |
| Own all-in | $2,856 | P&I $2,023 + tax/ins $500 + upkeep $333 |
| The gap | $655 | closing costs must earn this back |
Rent-versus-buy is not a mortgage-versus-rent comparison: owning costs the payment plus property tax, insurance and roughly one percent of the price in yearly maintenance - and buying starts about 8 percent underwater in closing costs that take years to earn back.
Bottom line: renting a $2,200 apartment against buying a $400,000 house runs about $2,200 against $2,855 all-in - a $655 monthly gap that is the real cost of ownership. The break-even question is how many years the house needs to appreciate past that gap plus closing costs.
The honest part: the answer is mostly a time-horizon question. Under three years, renting wins almost always because closing costs eat the difference; past seven, the payment locks while rent keeps climbing and ownership usually wins - the calculator prices your exact years.
How to use
- Enter your current monthly rent and the price of the house you would buy.
- Read the true monthly cost of owning - payment, tax, insurance and the 1-percent maintenance line.
- Compare the gap against your realistic time in the home; under three years, lean rent.
Frequently asked questions
What is the true monthly cost of owning a home?
Principal and interest plus property tax plus insurance plus about one percent of the home price per year in maintenance - on a $400,000 house with 20 percent down near current rates, that lands around $3,000 to $3,100 a month, well above the mortgage payment alone.
How many years before buying beats renting?
Transaction costs run about 8 percent of the price across buying and selling, so the house needs several years of appreciation and rent-avoidance to earn that back. Most honest break-evens land between four and seven years; under three, renting usually wins.
Does the calculator count home appreciation?
The monthly comparison does not - appreciation is the upside case, and it depends on your market. The all-in framing is deliberately conservative: if you would buy the house anyway, appreciation is a bonus, but it is not a monthly budget line.
What about the tax deduction on interest?
Only itemizers get it, and after the standard deduction nearly doubled in 2017, most homeowners no longer itemize. Treat any mortgage-interest deduction as a bonus, not a plan - the all-in monthly number works without it.