Buying vs. Renting – Home

Compare the cost of buying or renting a home. Present value is useful for this comparison because of the uneven nature of cash outlays when buying a home.

To open this calculator, click Calculators in the toolbar, and then click Personal Finance > Buying vs. Renting - Home in the left panel.

You can export the data as a PDF file or clear all data that you entered. For more information, see Financial calculators.


Taxpayers are currently renting a residence for $1,500 per month. Would buying a home for $200,000 save them money over the 15-year term of the loan?

Field Input
Federal tax rate 28%
Price of home $200,000
Down payment $40,000
Loan term in years 15
Points 1
Other closing costs $800
Annual interest rate 5.50%
Homeowner's insurance $1,300
Maintenance $1,000
Annual appreciation 2%
Years of occupancy 15
Monthly rent $1,500
Annual rate of return 5%

In this example, the present value of the cost of renting for 15 years is $189,682.86. The present value of the cost of buying after 15 years is $87,896.86. The difference in cost is $101,786.00.

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