Should You Buy or Rent?
The most comprehensive analysis to help you decide.
How long will you stay?
This is the typical break-even range for most markets.
Other Costs
Ongoing Costs
Maintenance Budget
Industry standard is 1-2% of home value annually. Many first-time buyers underestimate this.
= $6,000/year ($500/month)
Standard Deduction: $14,600
We'll calculate if itemizing benefits you.
Tax Deductions
These help determine if you'll benefit from itemizing with a mortgage.
Investment Assumptions
Renting saves you $112K
Over your 7-year horizon
Renting
Buying
How is "Final Wealth" calculated?(click to expand)
Renting Final Wealth
Down payment + closing costs invested in stocks, plus monthly savings (difference between buying and renting costs) invested over time.
Buying Final Wealth
Home value minus remaining mortgage minus selling costs (agent commissions, closing costs, repairs).
Key Takeaways
- Buying never catches up to renting in this scenario.
- You'll save $3,374/year from the mortgage interest deduction.
- Buying builds $28K in equity from principal payments, plus $92K from appreciation.
- Renting wins in 12 of 12 scenarios tested.
View assumptions used
Renting Wins... But There's a Third Option
What if you could get the best of both worlds?
House hacking lets you live cheaper than renting while building equity like buying. It's like renting with training wheels for real estate investing.
$2,318
vs $3,379 buying alone
$212K
+$49K vs regular buying
$1,800/mo
From your other unit
The House Hack Calculator shows exactly how much you could save
Frequently Asked Questions
Why does changing property tax affect the renting scenario?
When buying costs increase (due to higher property taxes), the monthly cost difference between buying and renting grows. In the renting scenario, we assume you invest this "savings" (the difference between what a buyer pays and what a renter pays) in the stock market. So if buying costs more due to higher taxes, the renter has MORE money to invest each month, which leads to higher renting wealth over time.
Why is my buying wealth so low in Year 1?
Buying wealth includes selling costs (typically 7-10% of home value for agent commissions, closing costs, and repairs). In early years, most of your mortgage payment goes to interest, not principal, so you build equity slowly. Combined with selling costs, your net equity is much lower than your down payment initially. This is why buying usually only makes financial sense for longer time horizons (typically 5-7+ years).
How does the mortgage interest deduction work?
You can only benefit from the mortgage interest deduction if your total itemized deductions exceed the standard deduction ($14,600 single, $29,200 married in 2024). Your itemized deductions include mortgage interest, property taxes (up to $10,000 SALT cap), state income taxes (part of SALT cap), charitable donations, and other deductions. For most homeowners, especially with the $10,000 SALT cap since 2018, itemizing no longer makes sense.
What's included in "Monthly Cost" for each scenario?
Renting: Base rent + renter's insurance + utilities + any additional costs (parking, storage, pet rent).
Buying: Mortgage principal & interest + property taxes + homeowner's insurance + HOA fees + utilities + maintenance (1-2% of home value annually) + PMI (if applicable).
How is "Final Wealth" calculated for each scenario?
Renting: Down payment (that you would have used to buy) invested in stocks + monthly savings invested, grown at your specified stock return rate over the time horizon.
Buying: Home value at end of time horizon − remaining mortgage balance − selling costs (agent commissions + closing costs + repairs, typically 7-10% of home value). This represents the cash you'd walk away with if you sold the home.
What is the SALT cap and how does it affect my taxes?
SALT (State and Local Tax) deductions are capped at $10,000 per year since 2018. This includes both property taxes AND state/local income taxes combined. In high-tax states like California, New York, or New Jersey, many homeowners hit this cap quickly, which limits the tax benefit of homeownership. If your property taxes alone are $10,000+, you get no additional benefit from state income tax deductions.
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