# Home Rent vs. Buy Calculator

Get a Home Rent vs. Buy Calculator branded for your website! Colorful, interactive, simply The Best Financial Calculators!
Should you rent or should you buy your home? This calculator helps you weed through the fees, taxes and monthly payments to help you decide between these two options. This report is based on the original purchase price, fees and taxes payable at that time. Insurance and tax costs can fluctuate from year to year.

## Home Rent vs. Buy Calculator Definitions

Price of home
Purchase price of the home you wish to buy.
Interest rate
The current interest rate you expect to receive on your mortgage. Please note that the interest rate is different from the Annual Percentage Rate (APR), which includes other expenses such as mortgage insurance, and the origination fee and or point(s), which were paid when the mortgage was first originated. The APR is normally higher than the simple interest rate.
Term in years
The number of years over which you will repay this loan.
Monthly PMI
Monthly cost of Private Mortgage Insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.5% of your loan balance each year.
Loan amount
Calculated amount of the loan for this home purchase.
Monthly payment (PI)
Monthly principal and interest (PI) payment.
Property tax rate
Your property tax rate. 1% for a \$100,000 home equals \$1,000 per year in property taxes.
Home insurance rate
Your homeowner's insurance rate. 0.5% for a \$100,000 home equals \$500 per year for homeowner's insurance.
Association and maintenance fees
Any association fees you are required to pay per month with the ownership of this home. Also include any other maintenance costs you expect to incur with the ownership of this home that you are not paying while you continue to rent.
Cash on hand
Cash you have for the down payment and closing costs.
Loan origination rate
The percentage the lending institution charges for its origination fee. 1% for a \$100,000 home equals \$1,000.
Points paid
The total number of points paid to reduce the interest rate of your mortgage. Each point costs 1% of your mortgage balance.
Other closing costs
Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other miscellaneous fees paid.
Total for down payment
Total funds remaining for down payment.
Monthly rent payment
Amount you currently pay for rent per month.
After-tax investment return
The rate of return, after taxes, you could receive if you invested your closing costs and down payment instead of purchasing a home.

The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2023, had an annual compounded rate of return of 15.2%, including reinvestment of dividends. From January 1, 1970 to December 31st 2023, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.9% (source: www.spglobal.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.

Income tax rate
Your current marginal income tax rate. **TAXTABLE_CURRENT_DEFINITION**
Expected inflation rate
This is what you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI). From 1925 through 2023 the CPI has a long-term average of 3.0% annually. Over the last 40 years the highest CPI recorded was 13.5% in 1980. For 2023, the last full year available, the CPI was 3.1% annually as reported by the U.S. Bureau of Labor Statistics. Inflation rate is used to adjust amounts subject to annual increases. These amounts include rent, insurance and tax payments.
Home value appreciation
Amount you expect your home value to appreciate annually.
Future sales commission
The percent of your home's selling price you expect to pay to a broker or real estate agent when you sell your home.
House payment
Total of principal, interest, taxes and insurance (PITI) and maintenance paid per month for your home. Insurance includes Principal Mortgage Insurance (PMI) and homeowner's insurance.