Renting vs. Buying a Home Calculator

Trying to decide if it makes more sense to rent or buy a home? You’re not alone. More than one-third of American households rent their homes, and it’s likely many have also grappled with the decision of renting vs. buying. 

Often, the right move comes down to one key question: Which makes the most sense for your goals and your wallet? A rent vs. buy calculator can guide you toward the answer by comparing the costs, both upfront and over time, so you can make the most well-informed choice. 

Whether you’re focused on monthly savings or on building long-term financial stability, running the numbers offers you a clearer view of your options. So, if you’re weighing the trade-offs or thinking about buying your first home, a calculator can help you see where you stand — and what’s possible with the right home loan. 

Key takeaways 

• Using a rent vs. buy calculator can help you estimate and compare the short- and long-term costs of each option. 
• Renting often provides more flexibility and lower upfront costs, but you don’t build equity. 
• Buying a home requires a higher initial investment but can offer greater stability and long-term financial benefits (like building equity). 
• Personal goals, lifestyle, and location are just as important as cost when deciding whether to rent or buy. 

What to consider in your rent vs. buy calculations 

If you’re wondering how to calculate whether it’s best to rent or buy a home, the answer isn’t always clear-cut. It’s not a straight one-to-one comparison, as several factors (other than just costs) can tip the balance one way or the other. 

Yes, dollars and cents matter, but so do location, lifestyle needs, and personal goals. For example, while a monthly rent payment may be cheaper in the short-term, homeownership could offer long-term benefits that you probably won’t see right away. 

A rent vs. buy calculator can help lay out the numbers, but here are a few other things worth weighing: 

• Where you live: In some markets, sky-high home prices make renting the smarter short-term move. In others, monthly mortgage payments may be surprisingly competitive. 
• How long you plan to stay: If you expect to move again within a few years, renting may offer more flexibility without the costs of buying and selling. But if you’re staying put for a while, buying a home may be a wiser investment. 
• Financial stability and predictability: Rent payments can increase annually, depending on your lease or the whims of the property owner. A fixed-rate mortgage, however, offers more predictable monthly payments. 
• Upfront and ongoing costs: Buying comes with closing costs, property taxes, maintenance, and possibly private mortgage insurance (PMI) — things you don’t have to deal with as a renter. 
• The value of building equity: Rent payments go toward your landlord, while mortgage payments gradually increase your ownership stake in your home. 

Remember: Everyone’s situation is different, and a calculator can’t make the final decision for you. But it can help you see the bigger picture based on your personal goals and financial situation. 

Typical costs to rent 

Zillow puts the average monthly U.S. rent at $1,850 as of May 2025, although what you pay will vary significantly depending on where you live and the size and style of home you rent. 

Renting can seem more straightforward than buying, especially when it comes to expenses. And less money is typically required upfront. Here’s what to budget for when looking to rent: 

• Monthly rent: This is your main recurring cost — one that may increase each time you renew your lease. 
• Security deposit: This fee, often equal to one month’s rent, is refundable if you leave the place in good condition when you move out. 
• Application fees: Some landlords and property managers charge a fee to process your rental application or run a credit check. 
• Utilities: Depending on your lease agreement, you may need to cover some or all utilities, such as water, electricity, gas, or internet. 
• Renters insurance: This protects your personal belongings in case of fire, theft, and other covered events. 

Typical costs to buy 

The median monthly mortgage payment is $2,205, according to Mortgage Bankers Association data from January 2025. As with rental prices, your precise payment will reflect the loan type and term, where you live, and the specs of the home you buy. 

Buying a home often requires you to pay more in upfront and recurring expenses. However, these costs also reflect the investment you’re making in a long-term asset that could grow in value over time. 

Here’s a breakdown of what to expect: 

One-time costs 

• Down payment: This is a percentage of the home’s purchase price you pay at closing. Depending on the types of home loans you’re eligible for, down payments can range from 0% to 20%. 
• Closing costs: These costs include loan fees, title insurance, inspections, and other administrative costs. They typically range from 2% to 5% of the price of the home. 
• Earnest money deposit: Earnest money is a small deposit made when you make an offer. It shows the seller you’re serious about buying the home. Earnest money is usually applied to your closing costs or down payment. 

Ongoing costs 

• Monthly mortgage payment: This payment includes principal (paying down the loan amount), interest, property taxes, and homeowners insurance. It may also include private mortgage insurance if your down payment is less than 20%. 
• Maintenance and repairs: Homeowners are responsible for the upkeep of the home and property. A good rule of thumb is to budget 1% of your home’s value for annual maintenance. 
• Property taxes and HOA fees: These will vary based on where you live. Some neighborhoods have Homeowners Associations (HOAs) that charge monthly or annual fees for upkeep and shared amenities. As for property taxes, while they are often part of your monthly payment, you can also opt to pay them annually. 
• Utilities and home services: When buying a home, you’ll pay for all utilities (e.g., water, gas, electricity, internet). In some cases, these may be higher for larger or less energy-efficient homes. 

Weighing the pros and cons

A buying vs. renting calculator will help you crunch the numbers, but don’t ignore personal preferences and lifestyle factors when weighing your options. From flexibility and maintenance responsibilities to long-term wealth-building potential, each path comes with trade-offs. 

Pros and cons of renting 

Renting can offer short-term convenience and flexibility, but it may not support long-term financial goals like building equity. Here’s a quick look at the trade-offs you make when renting: 

Pros of renting: 

• You’ll pay lower upfront costs, with no down payment or closing fees. 
• It gives you the flexibility to move without having to sell the property. 
• There are fewer maintenance and repair responsibilities. 
• Budgeting is more predictable with shorter lease terms. 

Cons of renting: 

• Monthly payments don’t build equity. 
• Rent increases are common. 
• You’ll have limited ability to customize or renovate your space. 
• There’s less long-term stability or a sense of ownership. 

Learn more: If you rent but think you’d like to buy a home someday, start getting mortgage-ready by building credit and learning about financing options. 

Pros and cons of buying

Buying a home is a huge step with long-term rewards, but it comes with more responsibilities and upfront investments. Here’s what to keep in mind when weighing your options: 

Pros of buying: 

• It builds equity over time as you pay down your mortgage. 
• Monthly payments can be more predictable with a fixed-rate loan. 
• You can renovate, decorate, or improve the property. 
• There’s potential for value appreciation over the years. 
• You’ll enjoy greater long-term stability and a sense of ownership. 

Cons of buying: 

• Higher upfront costs include down payment, closing costs, and earnest money. 
• All maintenance and repairs are your responsibility. 
• It can be harder to move quickly if you plan on selling your home. 
• Market changes can impact home value and selling conditions. 

Choosing the right path for your goals 

At the end of the day, there’s no universal answer to the rent vs. buy debate. Learning how to calculate the trade-offs of renting vs. buying is part math, part mindset. It’s about what works for your life now and where you’re trying to go. 

Renting might be right if you value flexibility and need time to build your savings and credit. Buying could be the better option if you’re ready to invest in a more stable future and want to build equity. 

The good news? You don’t have to figure it all out alone.  

Start by exploring potential mortgage options so you know what’s possible. With AmeriSave, you can run the numbers quickly and apply online with confidence when you’re ready — all without pressure.  

Frequently asked questions 

Is it better financially to buy or rent a home?

It depends on your personal finances, where you live, and how long you plan to stay. Buying can be financially beneficial over the long term because you build equity and may see your home increase in value. However, renting may be the better short-term option if you want flexibility or aren’t ready for the upfront costs of homeownership. A rent vs. buy calculator can help you compare both options based on your current situation. 

What to consider when buying a home vs. renting?

Think beyond the monthly payment. Consider how long you plan to stay in one place, how much you’ve saved for upfront costs, and whether you’re ready to take on maintenance and repairs. Buying offers stability and long-term financial growth, while renting provides flexibility and fewer responsibilities. Weighing both lifestyle and financial factors can help you choose the path that best supports your goals.