Compare the long-term costs of buying a home versus renting.
Enter your details above to compare costs.
This calculator provides an estimate and does not include all potential costs or tax implications. Consult with a financial advisor.
Understanding the Mortgage vs. Rent Decision
Deciding whether to rent or buy a home is one of the most significant financial decisions an individual or family can make. While renting offers flexibility and lower upfront costs, buying a home can build equity and offer long-term financial benefits. This calculator helps you visualize the financial trade-offs over a specified period.
How the Calculator Works
The calculator compares the total cost of renting against the total cost of owning over a chosen number of years. Here's a breakdown of the calculations:
Rent Calculation:
The total cost of renting is simply the monthly rent multiplied by the number of months in the comparison period (years * 12).
Total Rent Cost = Monthly Rent * Years to Compare * 12
Mortgage Calculation:
The mortgage calculation is more complex and involves several components:
Loan Amount: This is the home price minus your down payment.
Loan Amount = Home Purchase Price - Down Payment
Monthly Mortgage Payment (Principal & Interest – P&I): This is calculated using the standard mortgage payment formula. We first need to find the monthly interest rate and the total number of payments.
Monthly P&I = Loan Amount * [Monthly Interest Rate * (1 + Monthly Interest Rate)^Total Number of Payments] / [(1 + Monthly Interest Rate)^Total Number of Payments - 1]
(If Monthly Interest Rate is 0, Monthly P&I = Loan Amount / Total Number of Payments)
Total Annual Ownership Costs: This includes the monthly P&I payment (multiplied by 12), plus annual property taxes, annual homeowner's insurance, and estimated annual maintenance costs.
Total Cost of Owning (over comparison years): This sums up the total annual ownership costs for the duration of your comparison period.
Total Ownership Cost = Total Annual Ownership Costs * Years to Compare
Investment Return (for Renters):
If you rent, the money not spent on a down payment and closing costs (which are not factored into this basic calculator but are crucial in reality) can be invested. This calculation estimates the potential growth of that saved amount over the comparison period, assuming it's invested at the specified annual return rate. This is a simplified future value calculation.
Total Renting Cost (with potential investment growth) = Total Rent Cost - (Down Payment * (1 + Investment Return Rate / 100)^Years to Compare)
(Note: This is a simplification. A more accurate model would consider recurring savings and their growth. For this calculator, we are showing the potential growth of the initial down payment as a proxy for accumulated savings if you rent).
Key Considerations:
Down Payment & Closing Costs: Buying typically requires a significant upfront sum for a down payment and closing costs (appraisal fees, legal fees, title insurance, etc.).
Property Taxes & Insurance: These are ongoing costs for homeowners.
Maintenance & Repairs: Homeowners are responsible for all upkeep, from minor repairs to major system replacements.
Home Appreciation/Depreciation: The value of a home can increase or decrease over time, significantly impacting the overall financial outcome.
Equity Building: A portion of each mortgage payment goes towards paying down the loan principal, building equity.
Tax Benefits: Mortgage interest and property taxes may be tax-deductible for homeowners, which can reduce the overall cost (consult a tax professional).
Flexibility: Renters generally have more flexibility to move for job opportunities or lifestyle changes.
Market Conditions: Interest rates, housing market trends, and rental market conditions heavily influence the best choice at any given time.
This calculator aims to provide a clear financial comparison, but the decision also involves personal financial goals, lifestyle preferences, and risk tolerance.
function calculateMortgageVsRent() {
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value);
var homePrice = parseFloat(document.getElementById("homePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var annualPropertyTax = parseFloat(document.getElementById("annualPropertyTax").value);
var annualHomeInsurance = parseFloat(document.getElementById("annualHomeInsurance").value);
var annualMaintenanceRate = parseFloat(document.getElementById("annualMaintenance").value);
var investmentReturnRate = parseFloat(document.getElementById("investmentReturnRate").value);
var yearsToCompare = parseFloat(document.getElementById("yearsToCompare").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
// Input validation
if (isNaN(monthlyRent) || monthlyRent < 0 ||
isNaN(homePrice) || homePrice < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate < 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(annualPropertyTax) || annualPropertyTax < 0 ||
isNaN(annualHomeInsurance) || annualHomeInsurance < 0 ||
isNaN(annualMaintenanceRate) || annualMaintenanceRate < 0 ||
isNaN(investmentReturnRate) || investmentReturnRate < 0 ||
isNaN(yearsToCompare) || yearsToCompare 0) {
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
if (monthlyInterestRate > 0) {
monthlyMortgagePayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
monthlyMortgagePayment = loanAmount / numberOfPayments;
}
} else {
monthlyMortgagePayment = 0; // If no loan needed, P&I is 0
}
annualMaintenanceCost = (annualMaintenanceRate / 100) * homePrice;
var totalAnnualOwnershipCosts = (monthlyMortgagePayment * 12) + annualPropertyTax + annualHomeInsurance + annualMaintenanceCost;
var totalOwnershipCost = totalAnnualOwnershipCosts * yearsToCompare;
// — Investment Return for Renters (Simplified) —
// This is a simplified way to show potential growth on the initial down payment amount
// A more complex model would account for recurring savings.
var potentialInvestmentGrowthOnDownPayment = 0;
if (downPayment > 0 && investmentReturnRate > 0) {
potentialInvestmentGrowthOnDownPayment = downPayment * Math.pow(1 + (investmentReturnRate / 100), yearsToCompare) – downPayment;
}
var adjustedTotalRentCost = totalRentCost – potentialInvestmentGrowthOnDownPayment;
// — Display Results —
var comparisonStatement = "";
var rentIsCheaper = adjustedTotalRentCost < totalOwnershipCost;
var mortgageIsCheaper = totalOwnershipCost < adjustedTotalRentCost;
if (rentIsCheaper) {
comparisonStatement = "Renting appears to be more cost-effective over " + yearsToCompare + " years.";
} else if (mortgageIsCheaper) {
comparisonStatement = "Owning appears to be more cost-effective over " + yearsToCompare + " years.";
} else {
comparisonStatement = "The costs of renting and owning are projected to be similar over " + yearsToCompare + " years.";
}
var rentCostDisplay = Math.round(adjustedTotalRentCost).toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var mortgageCostDisplay = Math.round(totalOwnershipCost).toLocaleString('en-US', { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = `
Estimated Total Cost of Renting (${yearsToCompare} years):
${rentCostDisplay}
(Includes estimated investment growth on your potential down payment)
Estimated Total Cost of Owning (${yearsToCompare} years):
${mortgageCostDisplay}
${comparisonStatement}
`;
}