How this calculator works
Buying a home costs more than the mortgage payment. The honest monthly cost includes principal + interest (P&I), property taxes, insurance, HOA fees, maintenance reserves, and the return you give up by tying up a down payment that could be invested elsewhere.
This calculator compares the full monthly cost of ownership against rent + renters insurance. The opportunity cost is the annual return you'd earn if you invested the down payment and closing costs in the market at your expected rate, divided by 12.
Not modeled: home appreciation, mortgage principal paydown building equity, tax deductions (interest + property tax), rent increases over time, moving costs, and closing costs. The true long-term calculation is more nuanced. Use this as a starting point, not as financial advice.
FAQ
Is buying always cheaper than renting?
No. For the first 5-7 years especially, renting is often cheaper in expensive metros because closing costs, interest-heavy early payments, and maintenance add up. Buying tends to win over longer horizons (10+ years) as rent inflates and your mortgage is paid down.
What's the 1% rule for maintenance?
A common rule of thumb: budget 1% of your home's value per year for maintenance. $450,000 home = $4,500/year = $375/month. Newer homes may need less; older homes need more.
What's opportunity cost on the down payment?
If you put $90,000 down and instead invested it at 6% a year, you'd earn $5,400 a year. That's real money you're giving up. Factoring this in gives you an apples-to-apples cost comparison instead of a biased one.
Why doesn't this include home appreciation?
Appreciation is real but uneven by market and very sensitive to your hold period. Intentionally leaving it out keeps this calculator honest about the monthly out-of-pocket cost. Appreciation is the upside if you stay long enough.
Should I buy based only on this number?
No. Financial comparison is only part of the picture. Stability, timeline, flexibility, and lifestyle all matter. But you should at least go into the decision knowing the real monthly numbers.