Rent vs Buy Calculator for California
Renting costs the rent. Buying costs the payment, the taxes, the insurance and the upkeep, and hands some of it back as equity when you sell, less what selling costs. This rent vs buy calculator runs both year by year over the span you plan to stay, and says in which year, if any, buying comes out ahead.
Rent vs buy
What that works out to
- Rent paid over the horizon
- $440,213
- Cost of owning over the horizon, after selling
- Needs a rate
- Equity at the end of the horizon
- Needs a rate
- Buying comes out ahead after
- Needs a rate
Enter the rate you have been quoted and the numbers appear. We do not publish rates.
These are estimates from the figures you entered, not a quote, an offer, or a commitment to lend.
A calculator works from the figures you typed into it. Your loan officer works from your file and your credit, against the lenders on our panel.
Ask us for a real quoteHow the math works
Each year, buying costs the twelve loan payments, property taxes on the home's value at the start of the year, the homeowners insurance, any dues and the upkeep as a share of the value. Renting costs twelve months of rent. At the end of each year the home's value grows by the appreciation rate and the rent by its growth rate.
Equity at the end of a year is the value then, less the loan balance then. The cost of owning is everything paid out, less the equity earned beyond the down payment, plus what selling at that year's value would cost.
The crossover is the first year in which that cost of owning is no more than the rent paid so far. If there is no such year inside the horizon, the calculator says so rather than printing one.
Nothing is discounted, invested or taxed: what the down payment could have earned elsewhere, and what owning does to your taxes, are questions for an accountant and are left out on purpose.
Starting assumptions
The property tax rate, the homeowners insurance and the dues open on the same general figures as the payment calculator, and the upkeep, the appreciation, the rent growth and the cost of selling on round starting points. Mortgage insurance is left out. Every one of them is yours to change.
These are estimates from the figures you entered, not a quote, an offer, or a commitment to lend.
Questions about renting and buying
Is it cheaper to rent or buy in California?
It depends on the price against the rent, how long you stay, and what the home's value and the rent do over that time. Over a short stay the cost of selling weighs against buying; over a longer one the equity has more time to build. The calculator runs the figures you enter year by year and names the year, if any, buying comes out ahead.
What does the calculator count as the cost of buying?
The loan payments, property taxes on the home's value, homeowners insurance, association dues and upkeep as a share of the value, year by year. Against that it credits the equity built beyond the down payment and charges the cost of selling at the end of the horizon.
Why is the down payment not counted as a cost?
Because it comes back as equity: cash put into the home at the start is still yours in the home at the end. What the calculator does not count is what that cash could have earned elsewhere, which is a question for an accountant rather than for a mortgage calculator.
What is the crossover year?
The first year in the horizon in which the cost of owning, after selling and after the equity earned, is no more than the rent paid over the same years. If no year in the horizon reaches it, the calculator says so.
Pick the question you are trying to answer
- Monthly payment
What leaves your account each month once taxes, insurance and dues are inside the figure.
- Affordability
What your income carries once your debts, the taxes and the insurance come out of it.
- Refinance break-even
The month the closing costs are paid back, and what the new loan costs over its life.
- Amortization schedule
Every payment, split into interest and principal, year by year.
- DSCR check
Whether a rental's rent covers its own payment, taxes, insurance and dues.
- HELOC payment
The monthly figure on a HELOC balance at the rate you were quoted.
- Closing costs
Add up the lines on a Loan Estimate and see what the credits take off.
A quote needs your file
Send us what you are working with, and your loan officer can price it against the lenders on our panel.
No credit pull to get started. This is not a commitment to lend. Equal Housing Opportunity.