The Rent vs. Buy Calculator is a tool to help you decide whether or not it makes sense to keep on renting or to purchase a home. Here’s how it works.

1. August 2021
Back to blog
Should you rent vs. buy? The real estate market is hot, and interest rates are at historic lows. But you might still
be wondering should I rent vs. buy? The decision isn’t an easy one. With mortgage payments, down payments,
and closing costs, it can seem daunting to make the jump into homeownership. Although, it might make more
sense financially. So, how do you know what to do? The Rent vs. Buy Calculator is a tool to help you decide
whether or not it makes sense to keep on renting or to purchase a home. Here’s how it works.
How to Use Rent vs. Buy Calculator
Since renting versus buying is not an apples-to-apples comparison, you would have to crunch many numbers
(or higher an expert) to understand which one makes the most financial sense. But a Rent vs. Buy Calculator
does all of that for you and simplifies the process by asking you to input just a few key numbers that you will
know. Here’s how to do it.
Start With Your Current Renting Scenario
Before you can make a future move, you have to understand your current living situation and its costs. That’s
why you’ll enter just three key numbers:
That’s it! Just those few numbers will set the foundation to run the comparison and answer the question of,
“Should I rent vs. buy?”
Input New Home Purchase Scenario
So, you’ve got the rent part down. Now, it’s time to estimate the new home purchase scenario. That’s
accomplished by inputting six data points.
Assumptions Determine Rent vs. Buy Comparison
After inputting the key financial factors listed above and clicking “Ok, next,” you’ll be brought to a page with
some more numbers. These will be filled in for you based on Get A Rate’s internal calculations. So, you don’t
need to do anything in this section. But it gives you an idea of the additional costs that need to be considered
when determining whether to rent or buy. These are often not considered when looking into purchasing a
home and why many first-time homebuyers have sticker shock. These additional considerations include:
Should I Rent vs. Buy?
Once all of the financial information is entered, you will click “Compare.” The next screen will reveal whether or
not it makes sense to rent or buy based on the home price and current rent amount. Not only will you get a
simple rent or buy answer, but the calculator will also explain why the scenario works or doesn’t work. It will
reveal:
You can also choose the “Monthly Payment” tab to see exactly how the cost breaks down monthly with renting
versus buying.
Ultimately, the Rent vs. Buy Calculator helps you make the most informed decision. You might get nervous
about all the money upfront and not understand how you could actually save money (and a lot of it) if you buy.
Here the guesswork is taken away so that you can feel confident in your choice.
Buying a Home Financial Tips
Share post:
Was this article helpful? Yes No 1 out of 1 found this helpful
Rent vs. buy? Our #1 Simple Comparison
Calculator Will Help You Decide
Current Monthly Rent: You could also input the proposed rent if trying to compare future scenarios.
Monthly Renters Insurance: Here, you will input the cost of your renter’s insurance monthly. So, even if you pay
yearly or twice a year, break that number down to what it works out to monthly.
Annual Rent Increase: Get A Rate uses the average 4% increase in its calculations, but you can adjust if you
know your landlord’s yearly rent increase amount.
Purchase Price: What is the cost of the home you’re considering? Or, what is an estimated home price you can
afford? If you need help determining this number, try the Affordability Calculator.
Down Payment: How much can you put down upfront? This will determine the loan amount and monthly
mortgage payment, which will then be compared to the cost of renting.
Zip Code: Towns have different tax rates, which is why you need to input where you are looking to buy a home.
That will be a signi cant factor in determining the monthly costs of owning a home versus renting one.
Years Before Selling: How long you plan to stay in your home will make a difference whether it makes sense to
rent or buy. Get A Rate can calculate how much the home will appreciate in value and compare that to what’s
left on your mortgage. For example, if you plan to be there for just a year, it might not make sense once you
factor in what’s left to pay and additional closing costs.
Military or Veteran: Members of the military and veterans can qualify for 0% down payments and get low-
interest loans, both of which will determine monthly mortgage payments. That then gets factored into the rent
versus buy comparison.
PMI: If you put down under 20% in a down payment, you will need mortgage insurance (PMI). So, check this box
if you are putting down less than 20%.
Closing Costs: You will have to shell out some more money upfront before even setting foot in that dream
home.
Yearly Appreciation Rate: This is the average appreciation rate of a home after purchasing it. This is important
when determining how long you plan to live in the house and what you will make selling it after that time.
Cost to Sell: Yes, before you even think about buying a home, you need to think about what it will cost you to
sell it. That amount will be factored into whether it makes sense to keep renting or to buy.
Term of Home Loan: This is how many years you have to pay back the loan. The standard amount is 30 years,
but you can choose 20, 15, or 10. Whichever you choose will affect your monthly mortgage payment and factor
into whether you should rent or buy.
Yearly Property Taxes: This number is carried over from the zip code you entered. Since towns have different
tax rates, this will affect your monthly mortgage payment and therefore answer the question, “Should I rent or
buy?”
Yearly Homeowners Insurance: This is automatically calculated based on averages. Get A Rate overestimates
this amount by 20% to ensure you’re fully prepared for that monthly cost of owning a home. Although, you can
enter an exact amount if you have a separate quote.
Yearly Maintenance Cost: Get A Rate automatically calculates this number based on .5% of the purchase price.
This is a good number you should always budget for because something inevitably needs to be xed in the
house.
Expected Selling Price
Down Payment and Closing Costs
Remaining Principal on Loan
Cost to Sell
Gain / Loss on Owning Home
Net Bene t
Related posts
November 2015
HomePath Ready: A First
Time Home Buyer Program
You’re a First Time Home
Buyer scavenging the web, looking
for THEE first time home buyer pr...
Buying a Home
November 2019
Need a Home Value Boost?
Try These Renos!
Looking to increase your Home Value?
Lovely! One of the best ways to do so
is with a Renovation project. Upgr...
Financial Tips
July 2016
How Long Will It Take? A
Timeline Roadmap
>>DOWNLOADABLE GUIDE AT
BOTTOM OF POST<< You’re giddy with
excitement. You’re lookin...
Buying a Home
November 2015
Get Credit Ready In 5 Steps
You’re thinking of buying a home and
getting a mortgage. (YAY!) One of the
best things you can do i...
Financial Tips
Sign in
Get Started
Purchase Re nance View Rates FAQs About Us
Learn Of ces

2. Tools
Purchase Calculator
Refinance Calculator
Affordability Calculator
Rent vs Buy Calculator
Credits / Points Calculator
Programs
Comparison
30 Years Fixed
15 Years Fixed
FHA Loan
VA Loan
About Us
Company
Information
Press Room
Careers
Testimonials
Contact
Learn
Blog
FAQs
Of ces
NJ Office
FL Office
GA Office
CA Office
© 2021. Get A Rate LLC. All Rights Reserved
NMLS #907795 Licensed Residential Mortgage Lender in CA, WA, GA, TX, PA, CT, FL, SC, IL and NJ (by the NJ Department of Banking and Insurance).
Equal Housing Opportunity Lender. When and if acting as a broker, Get A Rate will not make commitments or fund mortgage loans. Registered NY
Mortgage Broker. All NY mortgage loans are arranged with third party lenders – Get A Rate LLC does not directly offer or guarantee NY interest rates
or loan programs and does not directly issue commitments or make final decisions on loan terms. This website is not authorized by the NYDFS and
that no applications can be taken for NY loans on the site.
Get A Rate LLC is an FHA Approved Direct Lending Institution, and is not acting on behalf of or at the direction of HUD/FHA or the Federal
government. These programs are not a commitment to lend and program guidelines are subject to change.
Additional Disclosures
Home / HUD & RESPA / State Licenses & Disclosures, Terms & Conditions, Privacy Policy / 888-562-2611 / Rate Lock Policy / NMLS Consumer Access
Sign in
Get Started
Purchase Re nance View Rates FAQs About Us
Learn Of ces