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You can use this calculator to compare the cost of buying versus renting a home.
Note: Present value is useful for this comparison because of the uneven nature of cash outlays when buying a home.
Example
Taxpayers are currently renting their residence for $1,500 per month. Would buying a home for $200,000 save them money over the 15-year term of the loan?
Field | Input |
---|---|
Federal tax rate | 28% |
Price of home | $200,000 |
Down payment | $40,000 |
Loan term in years | 15 |
Points | 1 |
Other closing costs | $800 |
Annual interest rate | 5.50% |
Homeowner's insurance | $1,300 |
Maintenance | $1,000 |
Annual appreciation | 2% |
Years of occupancy | 15 |
Monthly rent | $1,500 |
Annual rate of return | 5% |
In this example, the present value of the cost of renting for 15 years is $189,682.86. The present value of the cost of buying after 15 years is $87,520.45. The difference in cost is $102,162.41.
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