Rent vs Buy Comparison
People say "renting is throwing money away," but that's an oversimplification. Buying has hidden costs too. This calculator compares both paths honestly — so you can make the right decision for your timeline, not someone else's opinion.
After 5 Years
If you rent
If you buy
Equity in your home if you sold at estimated value
The Details
The Real Rent vs Buy Math
This isn't as simple as "mortgage vs rent." There are hidden costs on both sides, and the right answer depends entirely on your timeline and local market.
Renting isn't "throwing money away"
When you rent, you're paying for a place to live — that's not wasted money. Renting gives you flexibility to move, zero maintenance costs, no property tax surprises, and no risk of your home losing value. If you're only staying somewhere for 1-2 years, renting almost always wins. The real question is what happens over time: rent increases every year (typically 3-5%), you build zero equity, and your landlord — not you — benefits from the home's appreciation. Over 5-10 years, those differences compound into a massive gap.
The hidden costs of buying
Your mortgage payment isn't the full cost of owning. You'll also pay property taxes (in NJ, roughly 2% of home value per year), homeowners insurance ($1,200-$2,400/year), maintenance and repairs (budget 1% of home value per year), and possibly PMI and HOA fees. On a $375,000 home, that adds roughly $700-$900/month on top of your mortgage payment. This calculator includes those costs in the "total cost to own" — so the comparison is apples to apples.
Equity — the wealth you build by living in your home
Every mortgage payment chips away at your balance, and every year your home (historically) gains value. That combination builds equity — your ownership stake. After 5 years on a $375,000 home, you might have $117,000 in equity from just making your regular payments and normal appreciation. That's money you can access through a sale, a cash-out refinance, or a home equity line. A renter making the same payments over the same period has nothing to show for it. This is the fundamental math that makes buying powerful over time.
Timeline is everything
Buying has high upfront costs (down payment, closing costs) and high transaction costs when you sell (agent commissions, transfer taxes). You need time in the home for appreciation and principal paydown to overcome those costs. The general rule: if you plan to stay less than 3 years, renting is usually cheaper. At 3-5 years, it depends on the market. Beyond 5 years, buying almost always wins. Try clicking the different timeline buttons above — the longer you stay, the more dramatic the buying advantage becomes.
The appreciation assumption matters a lot
This calculator defaults to 3% annual appreciation, which is close to the long-term national average. But your local market might be different. Some areas have seen 5-8% annual growth in recent years, while others have been flat. Higher appreciation makes buying look better; lower appreciation makes it look worse. Be honest with this number. Try setting it to 0% to see what happens with no appreciation at all — you'll notice buying still builds equity through principal paydown alone, though the advantage shrinks. That's the safety net: even in a flat market, you're still paying down your loan.
What about investing the down payment instead?
Some people argue you should rent and invest the down payment in the stock market. It's a fair point — the S&P 500 has historically returned ~10% annually. But here's the catch: when you buy a home, you're using leverage. A 10% down payment ($37,500) controls a $375,000 asset. If the home appreciates 3%, you gain $11,250 on a $37,500 investment — that's a 30% return on your cash. Renters don't get leverage. The honest answer? Both strategies can work, but buying gives you a place to live AND a leveraged investment, while renting gives you flexibility and potentially higher liquid returns. It depends on your priorities and discipline.
More calculators
This calculator is for educational and estimation purposes only. It does not constitute a loan offer, pre-approval, or commitment to lend. Brondt Cook Group | Acre Mortgage and Financial, Inc. | NMLS #13988 | Equal Housing Lender.