Rent or Buy? Run the Numbers Before You Decide
“Buying always beats renting” is a popular claim, but the real answer depends on the price-to-rent ratio, how long you'll stay, and your city.
Few financial decisions are as emotionally loaded as renting versus buying. Elders say renting is “paying your landlord's mortgage”; agents say “buy early, gain early.” But this question can be settled with numbers instead of slogans.
Two metrics that matter
- Price-to-rent ratio: home price ÷ annual rent. The lower, the better buying looks. Roughly, below 15 favors buying; above 25 favors renting.
- Holding period: how long you plan to stay in the city. Transaction costs — taxes, agent fees, renovation — need years to amortize.
The true cost of buying is more than the mortgage
Many people compare only “mortgage vs rent,” which is incomplete. Buying also carries the opportunity cost of the down payment, maintenance fees, repairs, property taxes, and eventual selling costs. Renting costs the rent itself plus the opportunity cost of the deposit.
Use the Mortgage Calculator for payments and total interest, then the ROI Calculator to estimate what the down payment could earn if invested — and compare the two together.
When renting makes more sense
- You'll stay in the city fewer than 3 to 5 years.
- Your job or income is unstable and you need flexibility.
- The local price-to-rent ratio is clearly high.
- You can't afford a down payment without draining your emergency fund.
A middle path
Renting first is no disgrace. Accumulate a down payment, learn the city and neighborhood, confirm job stability — better than rushing in under pressure. Once you're sure you'll put down roots, model it carefully with the Mortgage Calculator.