1. What is the Owning vs Renting Calculator?

This calculator compares the total costs of owning a home versus renting, taking into account mortgage payments, maintenance costs, property appreciation, rent payments, and opportunity costs of capital.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• Mortgage — Monthly mortgage payment
• Maintenance — Estimated monthly maintenance costs
• Appreciation — Expected monthly property value increase
• Rent — Monthly rental payment
• Opportunity Cost — Potential investment returns if down payment was invested

Explanation: The calculator provides a side-by-side comparison of the true costs of owning versus renting a property.

3. Importance of Cost Comparison

Details: Understanding the full financial implications of owning versus renting helps make informed housing decisions and long-term financial planning.

4. Using the Calculator

Tips: Enter all values in dollars. For accurate comparison, use monthly costs for all inputs. Consider typical values for your area when estimating maintenance and appreciation.

5. Frequently Asked Questions (FAQ)

Q1: What's included in maintenance costs?
A: Include property taxes, insurance, repairs, HOA fees, and other recurring costs of home ownership.

Q2: How do I estimate opportunity cost?
A: Estimate what your down payment could earn if invested (typically 4-7% annual return divided by 12 for monthly).

Q3: What's a typical appreciation rate?
A: Historically 3-5% annually (0.25-0.4% monthly), but varies by location and market conditions.

Q4: Should I include principal payments in mortgage cost?
A: Yes, include the full mortgage payment (principal + interest) as this is money you're committing.

Q5: How does time horizon affect this comparison?
A: Owning typically becomes more favorable over longer periods due to appreciation and mortgage paydown.