Buy vs Rent: The Calculator That Cuts Through Emotion

Ask ten experts and you will get twelve answers. The underlying math, thankfully, only has one. The 'always buy' and 'always rent' camps are both wrong. The honest answer hinges on five inputs and your local market.

What renting actually costs

Rent + renter's insurance + opportunity cost on the down payment you didn't tie up.

What buying actually costs

Mortgage + property tax + insurance + maintenance (1–3%/yr) + transaction costs (~5% buying, ~6% selling).

The 5-year rule

Buying rarely pays off if you'll move within 5 years — transaction costs eat the equity gain.

When buying clearly wins

Stable career and location, low rate environment, rent is more than ~5% of home price annually, long-term horizon.

Pro tips

• Run the price-to-rent ratio for your city. Above 21 = renting usually wins. Below 15 = buying usually wins.
• Don't forget property tax can be 1–3% per year — a quiet wealth drag.

Frequently asked questions

Is rent really 'throwing money away'? No — it buys you flexibility, no maintenance and locked costs. Owning has its own pile of cash-out moments.

What about appreciation? Historically homes track inflation +1–2%. Not a wealth-builder by itself; the leverage (mortgage) is.

Run your own numbers before you trust a rule of thumb. Two minutes saves a lot of regret.