Rent vs Buy Calculator

No. The answer depends on: how long you stay (buying wins with longer holds), your market (high price-to-rent ratio cities favor renting), opportunity cost of the down payment, home appreciation, transaction costs, and lifestyle flexibility. In very expensive markets, renting and investing the difference can beat buying.

Price-to-rent ratio = Home price / Annual rent. Under 15: strongly favors buying. 15-20: leans toward buying. 20-25: could go either way. Over 25: often favors renting. In San Francisco or NYC, ratios of 40-50+ are common — renting and investing the savings may be financially smarter in those markets.

Transaction costs (closing costs 2-5% when buying, 6-8% when selling) are the main hurdle. You typically need to stay at least 3-5 years to offset these costs and build enough equity. The longer you stay, the more buying makes sense. If you might move in 2-3 years, renting is often better.

Mortgage payment is just the start. Add: property taxes (1-2% of value annually), homeowners insurance ($1,500+/year), maintenance and repairs (1-2% of value annually), HOA fees if applicable, and opportunity cost of the down payment. True ownership cost is often 40-50% more than the mortgage payment alone.

If monthly rent is significantly less than buying costs, invest the difference in index funds. The math depends on home appreciation vs. stock market returns. Historically, stocks have returned more than real estate long-term, but a home provides leverage, tax benefits, forced savings, and housing stability that pure investments do not.