Rent vs Buy Calculator

Depends on: how long you'll stay (5+ years favors buying), local market (price-to-rent ratio), opportunity cost of down payment, and lifestyle flexibility needs. Buying builds equity but has high transaction costs. Renting offers flexibility and predictable costs.

The break-even point is when total cost of buying (including opportunity cost of down payment) equals total rent paid. Typically 3-7 years in most markets. Factors: closing costs, selling costs (~10% total), appreciation rate, and rent inflation.

Home appreciation (historically 3-4% nationally) builds equity, making buying more attractive over time. But appreciation varies widely by location and can be negative. Don't count on appreciation to make a purchase worthwhile - buy for housing value, not investment.

Often overlooked: closing costs (2-5%), maintenance (1-2% of home value/year), HOA fees, higher insurance, property taxes (reassessed at purchase), opportunity cost of down payment, and selling costs (6-10% when you move).

Divide home price by annual rent. <15: buying favors. 15-20: comparable. >20: renting may be better. Example: $400k home / $24k rent = 16.7 (comparable). This is a quick check - full analysis should include appreciation, taxes, and opportunity costs.