Mortgage vs. Rent Calculator

Understanding the Comparison

The "Hidden" Costs of Buying

Many people compare a mortgage payment directly to a rent payment, but that is a mistake. When calculating the cost of buying, you must include unrecoverable costs:

• Property Taxes: Money you never get back.
• Maintenance: The "1% Rule" suggests saving 1% of your home's value annually for repairs.
• Interest: In the early years of a mortgage, nearly all your payment goes to the bank, not your equity.
• Opportunity Cost: The money you tie up in a down payment could have been earning 7-10% in the stock market.

When Renting Wins

Renting is often better for FIRE adherents who value flexibility. If you invest the difference between a high mortgage and a lower rent payment (plus the down payment you didn't spend), your stock portfolio may outpace real estate appreciation over the long run.

Renting is typically better when:

• You plan to move within 5-7 years
• Rent is significantly cheaper than a mortgage payment
• You value flexibility and mobility
• You can invest the difference and earn strong returns
• You're in a high-cost housing market with low rental yields

When Buying Wins

Buying locks in your housing cost. While rents rise with inflation every year, a fixed-rate mortgage payment stays the same (though taxes and insurance will rise). Buying usually wins if you plan to stay in the same home for 7 to 10 years or more.

Buying is typically better when:

• You plan to stay in one place for 7+ years
• Mortgage payments (including taxes and insurance) are similar to rent
• You're in a market with strong home appreciation
• You value stability and customization of your living space
• Interest rates are low