Am I Better Off Buying?

This calculator helps you answer two key questions. First, what can you afford monthly? Second, which option builds more wealth over time?

Deciding whether to rent or buy a home is one of the biggest financial questions you'll face.

This rent vs. buy calculator helps you compare the financial costs of both options over time, beyond just the monthly payment.

Input your current rent and a potential home price to see when and at what point buying becomes the better financial choice for your situation.

Home Price

Down Payment

Interest Rate

Monthly Rent

How long do you plan to live there?

Property Taxes (%/yr)

Homeowners Insurance ($/yr)

Mortgage Insurance (%/yr)

Maintenance (%/yr)

HOA Dues ($/mo)

Investment Return (%/yr)

Loan Term (Years)

Closing Costs (% of loan)

Home Value Growth (%/yr)

Selling Costs (% of sale price)

Calculating...

Question 1: What Is the Monthly Cost?

Note: Buying costs do not include tax savings or principal payments which build equity.

Question 2: Which Option Builds More Wealth?

This chart shows your estimated net worth for each path. A higher value is better.

Should I Rent or Buy a Home?

The choice between renting and buying depends on your finances, your lifestyle, and your long-term goals. Renting offers flexibility, while buying allows you to build equity and wealth over time. Our calculator provides a data-driven comparison of your options based on the inputs and assumptions you select.

How To Use Our Rent vs. Buy Calculator

Ready to get a better understanding of the long-term costs? Input the following information into the calculator to compare the two paths.

Loan and Rent Details

Home Price. The price you’re willing to pay for your new home.

Down payment. The cash you plan to deposit toward the purchase of the home. A larger down payment reduces the lender's risk, which typically results in a lower interest rate for you and may eliminate the need for monthly mortgage Insurance.

Interest rate. The cost of borrowing money from the lender, calculated as a percentage of the amount of the loan.

Monthly Rent. How much you expect to pay in rent for a similar property.

How long do you plan to live there? The length of time you plan to occupy a residence, in years.

Home Purchase Taxes & Fees

Property Taxes. A tax assessed on real estate by the local government, usually based on the value of the property (including the land) you own.

Homeowners Insurance. Usually required by lenders, homeowners insurance provides protection against damage to your home and your personal belongings, as well as potential liability from events that occur on the property.

Mortgage Insurance. A protective fee, expressed as a percentage of the loan, that is typically required when your down payment is less than 20%. Requirements for this fee can vary significantly depending on your loan type (Conventional, FHA, or VA).

Maintenance. The estimated annual cost set aside for ongoing upkeep, routine repairs, and unexpected expenses (like plumbing or appliance failure) needed to preserve the home’s value, expressed as a percentage of the purchase price.

HOA Dues. The mandatory, recurring fee paid to the Homeowners Association if your property is part of a planned community, condo, or co-op. This fee covers the maintenance, repairs, and insurance for shared amenities and common areas.

Rental Assumptions

Investment Return. The hypothetical average annual rate of growth you could expect from investing the money instead of using it for a down payment. This figure is not guaranteed and represents the potential return on a diversified investment over a long period.

Home Purchase Assumptions

Loan Term. The total duration of the loan, which has a major impact on the amount of total interest you will pay over time.

Closing Costs. Upfront fees paid when purchasing a home, which are the sum of many third-party service charges (like appraisal, title insurance, and loan origination fees).

Home Value Growth. The estimated amount the home will increase in value annually.

Selling Costs. The total fees and costs required to finalize the home sale, which include percentage-based Realtor commissions, transfer taxes, title fees, and other administrative charges.

Understanding Your Mortgage Calculator Results

The rent vs. buy calculator provides a detailed comparison to help you understand the long-term financial implications.

Question 1: What is the Monthly Cost? This section breaks down the difference in your monthly payment between renting and buying. It takes into consideration monthly rent, mortgage payment, home owner association fees, maintenance costs, insurance, and taxes.

Question 2: Which Option Builds More Wealth? This section projects the potential financial outcomes of buying or renting a home. It compares the expected investment return in each scenario to illustrate which scenario might generate the most gains for the time you plan to remain in the home.^*

Once you’ve explored the numbers, a Pennymac Loan Expert can help you understand the mortgage process if buying seems like the right step for you.

What are the Financial Benefits of Buying?

While it comes with more responsibility, owning a home offers significant financial advantages that renting does not.

Building Equity: Every mortgage payment you make helps build your equity—the portion of the home you own. Your home is an asset that can increase in value over time.
Stable Monthly Payments: With a fixed-rate mortgage, your principal and interest payment will not change for the life of the loan, providing predictability that renting typically doesn’t offer. Note: While Principal and Interest (P&I) remains stable, your total monthly payment can still change because property taxes and homeowners insurance premiums typically increase over time.
Potential Tax Benefits: Homeowners may be able to deduct mortgage interest and property tax payments on their federal income taxes.^**

What are the Financial Benefits of Renting?

Renting can be the smarter financial choice, especially if your plans are short-term or you value flexibility.

Lower Upfront Costs: Renting typically only requires a security deposit and the first month's rent, which is significantly less than a down payment and closing costs for a home purchase.
No Maintenance or Repair Costs: Your landlord is responsible for all maintenance, from a leaky faucet to a new roof, protecting you from unexpected and expensive repairs.
Flexibility and Mobility: When your lease ends, you have the freedom to move for a new job, a different neighborhood, or a new city with minimal hassle and cost.

Beyond the Numbers: What Else Should I Consider?

Your decision shouldn't be based solely on finances. Take time to assess your personal situation and lifestyle goals.

How long do you plan to stay? The longer you plan to live in one place, the more financial sense buying makes. If you anticipate moving within a few years, renting is often the better choice.
Do you value stability or flexibility? Homeownership provides a sense of stability and community. Renting offers the freedom to adapt to life’s changes easily.
Are you ready for the responsibility? Owning a home requires time and money for maintenance, yard work, and unexpected issues. Be honest about whether you are prepared for these commitments.