Should you rent or buy a home and what are the long-term costs? On the one hand, you're tired of your landlord. On the other hand, buying a home likely means borrowing a lot of money. As well, when buying a home you must make a down payment, money that could otherwise be invested or put into savings. What should you do?

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Your Information

(Modify the values presented below according to your needs)

Funds available for real estate and/or investment:	$
Disposable monthly income available for housing or investing:	$
Estimate of the long-term inflation rate:		%
Estimate of after-tax return on portfolio investments:		%
Input related to the purchased residence:
Annual equivalent (APR) mortgage rate:		%
Down payment:	$
Months until maturity, amortization period (max 360):		months
Monthly expenses for purchased residence:	$
Expected (after-tax)return on real estate:		%
Market value of the purchased residence:	$
Input related to the rented residence:
Monthly rent:	$
Monthly expenses associated with the rental:	$

Your Result

Total Wealth, Real Dollars

If savings are all reinvested

Years		Buy House		Rent House		Difference
5	$		$		$
10	$		$		$
15	$		$		$
30	$		$		$

If savings are not reinvested

Years		Buy House		Rent House		Difference
5	$		$		$
10	$		$		$
15	$		$		$
30	$		$		$

Important notice: This calculator assumes that if you rent, you will invest all the money you would have used as a down payment. In addition, the calculator assumes that the money saved from renting relative to owning a home would also be invested. Many (perhaps even most) people may be tempted to spend rather than invest the savings. For those with less than iron self discipline, buying a home could constitute a form of forced savings.

* We wish to thank York University Professor Moshe A. Milevsky, and researchers at the Individual Finance and Insurance Decisions (IFID)Centre, a non-profit corporation, housed at the Fields Institute in Toronto, for developing the content of this calculator.