Compare your monthly housing costs for buying a home versus renting.
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Welcome to our Buy vs. Rent Calculator! This tool helps you compare your monthly housing costs for buying a home versus renting. By taking into account your income, debts, down payment, interest rate, and optional taxes/fees, you can determine a recommended home price and maximum purchase budget versus the cost of renting. This guide provides a detailed, step‑by‑step process to evaluate your housing affordability and make an informed decision.
Home affordability is the ability to purchase a home without overextending your budget. It is determined by comparing your income, debt obligations, and available down payment to the costs associated with owning a home, including mortgage payments, property taxes, and insurance.
To estimate your maximum home price for buying, you first determine the maximum monthly housing expense you can afford:
Once you have your maximum monthly mortgage payment
Where:
Finally, the home price is estimated as:
For renting, you simply compare your monthly rent cost to your estimated monthly housing expense.
Back to TopEnter your gross monthly income, monthly debt payments, desired housing ratio, and available down payment.
Use the formula:
Assume that the maximum housing expense is allocated to your mortgage payment.
Rearrange the mortgage payment formula to solve for
Add your down payment to the maximum loan amount:
Compare your estimated monthly mortgage payment (including taxes/fees if applicable) to your current monthly rent.
The calculator will display a recommended home price and a maximum purchase budget based on your financial data, as well as a comparison to your renting costs.
Scenario: Suppose your gross monthly income is $6,000, your monthly debt payments are $500, you plan to allocate 30% of your income to housing, and you have a down payment of $50,000.
Assume
If the annual interest rate is 4%, then:
Assume
Compare your estimated monthly mortgage cost (which would include additional costs if applicable) with your current rent.
Based on your financial data, you can afford a home priced around $290,000.
The Buy vs. Rent Calculator estimates a recommended home price and maximum purchase budget based on your financial inputs. By comparing the estimated mortgage payment with your current rent, you can determine which option aligns better with your financial goals.
Back to TopThis calculator is useful in various scenarios, including:
Our How Much House Can I Afford? Calculator is an essential tool for prospective homebuyers and financial planners. By estimating a recommended home price and maximum purchase budget based on your income, debts, down payment, interest rate, and optional taxes/fees, you can make informed decisions about your home financing options. For further assistance or additional resources, please explore our other calculators or contact our support team.
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