Rent vs Buy Home Calculator
Should you keep paying rent or make the leap to buying? This calculator compares both paths with the same assumptions: mortgage payment, property taxes, maintenance, appreciation, and the return you give up by using your down payment. The result shows which option leaves the lowest net cost and in which year you reach the break-even point.
With a $500,000 property, 20% down payment ($100,000), a 20-year mortgage at 8%, and rent of $3,500/month growing 5% a year, over 10 years:
- Buying nets ≈ $196,205 ($3,346/month payment plus costs, minus the equity you build)
- Renting nets ≈ $417,049 ($528,271 paid in rent − $111,222 your down payment would earn invested)
- Buying wins by ≈ $220,844, with the break-even point at ≈ year 2
Formulas
Payment = Loan × [r(1+r)^n] / [(1+r)^n − 1], where r = annual rate / 12 and n = months
Net cost = (Down payment + Closing + Payments + Taxes + Maintenance + Insurance) − Equity at the end
Net cost = Rent paid − Investment growth (down payment + closing invested at your chosen return)
The opportunity cost of the down payment is key: if that money earns more than the home appreciates, renting becomes relatively more attractive.
Step-by-step example (calculator defaults)
- Price and down payment: a $500,000 home; 20% down = $100,000; loan = $400,000.
- Closing costs: 3% = $15,000 (closing and registration).
- Monthly payment: $400,000 at 8% for 20 years = $3,345.76/month.
- Annual ownership costs: property tax 0.9% + maintenance 1% + insurance 0.5% = 2.4% of value, growing with appreciation (4% a year).
- Final value: after 10 years the home is worth ≈ $740,122 and the remaining loan is ≈ $275,763; your equity is ≈ $464,360.
- Renting side: $3,500/month with 5% annual increases = $528,271 paid over 10 years.
- Comparison: buying ≈ $196,205 net vs. renting ≈ $417,049 net → buying wins by ≈ $220,844.
Scenario table (same engine logic)
Figures rounded as the calculator does.
| Price | Rate | Rent/month | Term | Buy (net) | Rent (net) | Difference |
|---|---|---|---|---|---|---|
| $500,000 | 8% | $3,500 | 10 years | $196,205 | $417,049 | +$220,844 (buy) |
| $500,000 | 8% | $3,500 | 5 years | $122,517 | $185,783 | +$63,266 (buy) |
| $500,000 | 8% | $3,500 | 15 years | $222,056 | $704,011 | +$481,955 (buy) |
| $300,000 | 8% | $2,000 | 10 years | $117,723 | $235,136 | +$117,413 (buy) |
| $500,000 | 6% | $3,500 | 10 years | $120,964 | $417,049 | +$296,085 (buy) |
| $500,000 | 8% | $3,500 | 10 years, 2% appreciation | $314,153 | $417,049 | +$102,896 (buy) |
Interpreting the result
- Break-even point: the year when the accumulated cost of buying drops below renting. With the defaults it arrives at year 2; before that, renting is cheaper on paper; after it, buying builds an edge.
- Time horizon is the biggest lever: at 5 years buying wins by $63,266; at 15 years the gap grows to $481,955. If you may move soon, renting can still be the right call even when the calculator prefers buying.
- The down payment has an opportunity cost: $115,000 of down payment plus closing invested at 7% earns $111,222 over 10 years. With a higher expected return, that buying advantage shrinks.
- Common mistakes: comparing only the payment against rent without adding taxes, maintenance, insurance, and closing; ignoring appreciation; or assuming rent never rises.
This model excludes major maintenance (roof, plumbing), improvements, future sale taxes, and rate changes. Mortgage rates in Guatemala typically fall in an indicative 7%–10% annual range depending on bank, term, and credit profile: confirm the current rate directly with your bank. Educational tool, not financial or legal advice.
Frequently asked questions
It depends on how long you plan to stay, rates, appreciation, and your investment returns. With the defaults ($500,000, 8%, $3,500 rent), buying ends up ≈ $220,844 cheaper over 10 years; over short horizons, renting can win.
It is the year when the accumulated cost of buying becomes lower than renting. With the defaults it arrives at year 2: before it, renting is cheaper in cash flow; after it, buying builds equity faster.
Add the down payment, closing costs, payments, property tax, maintenance, and insurance, then subtract appreciation and the equity built. In the example: $196,205 net over 10 years.
It is the return you would earn by investing the down payment instead of using it to buy. At 7% over 10 years, $115,000 becomes $111,222 in growth; if your investments beat home appreciation, renting may be more efficient.
They typically fall in an indicative 7%–10% annual range depending on bank, term, and credit profile (educational reference). Confirm the current rate with your bank before deciding; a 2-point difference changes the result noticeably.
Related calculators
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- Amortization table: how each payment splits between principal and interest
- Rental yield: if you buy to rent, measure the return
- Compound interest: project what your down payment could grow into
- Savings goal: how much to contribute to build the down payment
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