Rent vs Buy Home Calculator

Rent vs. Buy Home Calculator

Compare the financial outcomes of renting versus buying a home over a specified time horizon.

function calculateRentVsBuy() { // Get input values var homePrice = parseFloat(document.getElementById("homePrice").value); var downPaymentPct = parseFloat(document.getElementById("downPaymentPct").value); var mortgageRate = parseFloat(document.getElementById("mortgageRate").value); var mortgageTermYears = parseFloat(document.getElementById("mortgageTermYears").value); var propertyTaxRate = parseFloat(document.getElementById("propertyTaxRate").value); var annualHomeInsurance = parseFloat(document.getElementById("annualHomeInsurance").value); var monthlyHOAFees = parseFloat(document.getElementById("monthlyHOAFees").value); var maintenancePct = parseFloat(document.getElementById("maintenancePct").value); var homeAppreciationPct = parseFloat(document.getElementById("homeAppreciationPct").value); var sellingCostsPct = parseFloat(document.getElementById("sellingCostsPct").value); var currentMonthlyRent = parseFloat(document.getElementById("currentMonthlyRent").value); var rentIncreasePct = parseFloat(document.getElementById("rentIncreasePct").value); var investmentReturnPct = parseFloat(document.getElementById("investmentReturnPct").value); var timeHorizonYears = parseFloat(document.getElementById("timeHorizonYears").value); // Input validation if (isNaN(homePrice) || homePrice <= 0 || isNaN(downPaymentPct) || downPaymentPct < 0 || isNaN(mortgageRate) || mortgageRate < 0 || isNaN(mortgageTermYears) || mortgageTermYears <= 0 || isNaN(propertyTaxRate) || propertyTaxRate < 0 || isNaN(annualHomeInsurance) || annualHomeInsurance < 0 || isNaN(monthlyHOAFees) || monthlyHOAFees < 0 || isNaN(maintenancePct) || maintenancePct < 0 || isNaN(homeAppreciationPct) || homeAppreciationPct < 0 || isNaN(sellingCostsPct) || sellingCostsPct < 0 || isNaN(currentMonthlyRent) || currentMonthlyRent <= 0 || isNaN(rentIncreasePct) || rentIncreasePct < 0 || isNaN(investmentReturnPct) || investmentReturnPct < 0 || isNaN(timeHorizonYears) || timeHorizonYears 0) { monthlyP_I = loanAmount * (monthlyMortgageRate * Math.pow(1 + monthlyMortgageRate, totalMortgagePayments)) / (Math.pow(1 + monthlyMortgageRate, totalMortgagePayments) – 1); } else { monthlyP_I = loanAmount / totalMortgagePayments; // 0% interest } var remainingMortgageBalance = loanAmount; var totalInterestPaid = 0; var totalPrincipalPaid = 0; // Calculate remaining balance and total interest/principal paid over the time horizon if (monthlyMortgageRate > 0) { if (paymentsMade > 0) { remainingMortgageBalance = loanAmount * Math.pow(1 + monthlyMortgageRate, paymentsMade) – monthlyP_I * (Math.pow(1 + monthlyMortgageRate, paymentsMade) – 1) / monthlyMortgageRate; if (remainingMortgageBalance < 0) remainingMortgageBalance = 0; // Loan paid off totalInterestPaid = (monthlyP_I * paymentsMade) – (loanAmount – remainingMortgageBalance); totalPrincipalPaid = loanAmount – remainingMortgageBalance; } else { // No payments made (e.g., time horizon is 0) remainingMortgageBalance = loanAmount; totalInterestPaid = 0; totalPrincipalPaid = 0; } } else { // 0% interest totalPrincipalPaid = Math.min(loanAmount, monthlyP_I * paymentsMade); remainingMortgageBalance = loanAmount – totalPrincipalPaid; totalInterestPaid = 0; } var currentHomeValue = homePrice; var totalPropertyTaxes = 0; var totalHomeInsurance = 0; var totalHOAFees = 0; var totalMaintenanceCosts = 0; for (var y = 1; y <= timeHorizonYears; y++) { currentHomeValue *= (1 + homeAppreciationPct); var annualPropertyTaxThisYear = currentHomeValue * propertyTaxRate; var annualMaintenanceThisYear = currentHomeValue * maintenancePct; totalPropertyTaxes += annualPropertyTaxThisYear; totalHomeInsurance += annualHomeInsurance; totalHOAFees += monthlyHOAFees * 12; totalMaintenanceCosts += annualMaintenanceThisYear; } var futureHomeValue = currentHomeValue; var sellingCostsAmount = futureHomeValue * sellingCostsPct; // Net Wealth if Buying: Value of asset – liabilities – selling costs var netWealthBuying = futureHomeValue – remainingMortgageBalance – sellingCostsAmount; // Total Cash Outflow if Buying (for comparison with renting cash outflow) var totalBuyingCashOutflow = downPaymentAmount + (monthlyP_I * paymentsMade) + totalPropertyTaxes + totalHomeInsurance + totalHOAFees + totalMaintenanceCosts + sellingCostsAmount; // — Renting Scenario Calculations — var investedDownPaymentFutureValue = downPaymentAmount * Math.pow(1 + investmentReturnPct, timeHorizonYears); var investedMonthlySavingsFutureValue = 0; // This will accumulate the difference in monthly costs var currentRentAdjusted = currentMonthlyRent; var currentHomeValueForTaxesMaintenance = homePrice; // For calculating hypothetical buying costs in each year var totalRentingCashOutflow = 0; for (var y = 1; y <= timeHorizonYears; y++) { var annualPropertyTaxThisYear = currentHomeValueForTaxesMaintenance * propertyTaxRate; var annualMaintenanceThisYear = currentHomeValueForTaxesMaintenance * maintenancePct; var hypotheticalMonthlyBuyingCost = monthlyP_I + (annualPropertyTaxThisYear / 12) + (annualHomeInsurance / 12) + monthlyHOAFees + (annualMaintenanceThisYear / 12); var monthlyRentingCostThisYear = currentRentAdjusted; var monthlyDifference = hypotheticalMonthlyBuyingCost – monthlyRentingCostThisYear; // Positive if buying is more expensive // Compound existing invested monthly savings and add new savings for this year investedMonthlySavingsFutureValue = (investedMonthlySavingsFutureValue + (monthlyDifference * 12)) * (1 + investmentReturnPct); totalRentingCashOutflow += currentRentAdjusted * 12; currentRentAdjusted *= (1 + rentIncreasePct); currentHomeValueForTaxesMaintenance *= (1 + homeAppreciationPct); } // Net Wealth if Renting: Value of invested down payment + value of invested monthly savings var netWealthRenting = investedDownPaymentFutureValue + investedMonthlySavingsFutureValue; // — Results Display — var resultHTML = "

Comparison Results (Over " + timeHorizonYears + " Years)

"; resultHTML += "

"; // Buying Summary resultHTML += "

"; resultHTML += "

If You Buy

"; resultHTML += "Future Home Value: $" + futureHomeValue.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "Remaining Mortgage: $" + remainingMortgageBalance.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "Selling Costs: $" + sellingCostsAmount.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "Net Equity from Sale: $" + (futureHomeValue – remainingMortgageBalance – sellingCostsAmount).toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "Total Cash Outflow: $" + totalBuyingCashOutflow.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "Net Wealth (Buying): = 0 ? 'green' : 'red') + ";'>$" + netWealthBuying.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "

"; // Renting Summary resultHTML += "

"; resultHTML += "

If You Rent

"; resultHTML += "Invested Down Payment Value: $" + investedDownPaymentFutureValue.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "Invested Monthly Savings Value: $" + investedMonthlySavingsFutureValue.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "Total Cash Outflow: $" + totalRentingCashOutflow.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "Net Wealth (Renting): = 0 ? 'green' : 'red') + ";'>$" + netWealthRenting.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultHTML += "

"; resultHTML += "

"; // Overall Conclusion resultHTML += "

Conclusion:

"; if (netWealthBuying > netWealthRenting) { resultHTML += "Buying results in $" + (netWealthBuying – netWealthRenting).toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + " more net wealth than renting over " + timeHorizonYears + " years."; } else if (netWealthRenting > netWealthBuying) { resultHTML += "Renting results in $" + (netWealthRenting – netWealthBuying).toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + " more net wealth than buying over " + timeHorizonYears + " years."; } else { resultHTML += "Both options result in approximately the same net wealth over " + timeHorizonYears + " years."; } document.getElementById("result").innerHTML = resultHTML; }

Understanding the Rent vs. Buy Decision

Deciding whether to rent or buy a home is one of the most significant financial choices many individuals and families face. It's not just about monthly payments; it involves a complex interplay of upfront costs, ongoing expenses, market appreciation, and opportunity costs. This calculator helps you compare the long-term financial implications of both options over a specific time horizon.

Key Factors When Buying a Home:

• Home Purchase Price: The initial cost of the property.
• Down Payment: The upfront cash you pay, typically a percentage of the home price. This reduces your mortgage loan amount.
• Mortgage Interest Rate & Term: These determine your monthly principal and interest payments and the total interest paid over the life of the loan.
• Property Taxes: Annual taxes assessed by local government, usually a percentage of the home's value, which can increase over time.
• Home Insurance: Mandatory annual insurance to protect against damage and liability.
• HOA Fees: Monthly fees for properties in homeowners associations, covering shared amenities and maintenance.
• Maintenance Costs: Annual expenses for repairs, upkeep, and potential renovations. These are often estimated as a percentage of the home's value.
• Home Appreciation: The expected annual increase in your home's market value, which builds equity.
• Selling Costs: Expenses incurred when you eventually sell the home, including real estate agent commissions, closing costs, and transfer taxes.

Key Factors When Renting a Home:

• Current Monthly Rent: Your regular payment to a landlord.
• Expected Rent Increase: The annual percentage by which your rent is likely to rise.
• Investment Return: If you choose to rent, the money you would have spent on a down payment and any monthly savings (compared to buying) can be invested. This rate represents the annual return you expect on those investments.

How the Calculator Works:

This calculator projects your financial position (Net Wealth) for both scenarios at the end of your specified time horizon. For buying, it considers the future value of your home, subtracts the remaining mortgage balance and selling costs. For renting, it calculates the future value of your initial down payment (if invested) plus the accumulated and compounded value of any monthly savings you might have by renting instead of buying.

It also provides a "Total Cash Outflow" for each option, giving you a sense of the total money spent over the period, though the "Net Wealth" is the ultimate indicator of your financial standing.

Important Considerations Beyond the Numbers:

While this calculator provides a robust financial comparison, the rent vs. buy decision also involves non-financial factors:

• Flexibility: Renting offers more flexibility to move for job changes or lifestyle preferences.
• Responsibility: Homeownership comes with responsibilities for maintenance, repairs, and property management.
• Emotional Value: Owning a home can provide a sense of stability, community, and the freedom to customize your living space.
• Market Volatility: Home values and investment returns can fluctuate, impacting the actual outcomes.
• Tax Benefits: Homeowners may qualify for tax deductions (e.g., mortgage interest, property taxes), which are not factored into this simplified net wealth calculation but can further reduce the effective cost of buying.

Use this calculator as a powerful tool to inform your decision, but always consider your personal circumstances, financial goals, and lifestyle preferences.