Rent or Buy

Is it cheaper to rent or to buy?

Compare the real cost of each option over time — including equity, appreciation, and what your down payment could earn if invested instead.

The home you'd buy

$450,000
20% ($90,000)
6.75%

Loan term

$300/mo
$120/mo
Estimated monthly payment$2,755

The comparison

If you rented instead of buying the home on the left, what would that look like?

$2,400
7 years

Assumptions

3.5%
3.0%
6.0%

After 7 years, buying comes out ahead by

$11,408

Comparing net cost (cash paid, minus equity or investment gains) over the same period.

Net cost of buying

$157,145

Down payment, closing costs, and 7yr of payments/taxes/insurance/maintenance, minus the equity you'd walk away with after selling costs.

Net cost of renting

$168,553

7yr of rent (growing 3%/yr), minus the investment growth on the down payment you didn't have to spend.

Estimates only — assumes 3% closing costs, 6% selling costs, and 1%/yr maintenance on the home.