Finance
Calculator for renting or buying home
Compare simplified cash flows for renting and buying home over the period wey you choose. Na you dey enter all prices, rates and rents — nothing here na market forecast.
Add to workspaceYour numbers
Result dey update as you type; no Calculate button dey. All calculation dey run inside your browser.
Which option lead for the period you hold am
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How the result break down
| Value wey e get |
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Wealth wey remain for di end of di planning period
Di two sides start with equal cash. Di renter invest di down payment and purchase fees; whichever side spend less every month invest di difference. Values fit negative, even when one bar stop for zero.
Which option lead for different holding periods
| How long you hold am | Value wey e get |
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Mortgage payments stop after di loan term. Home value, rent and alternative investments compound monthly from di yearly assumptions; holding time round to di nearest month.
Formula
M na monthly mortgage payment, P na principal wey you borrow, r na monthly interest rate and n na loan term in months. Monthly spending for ownership dey add tax, insurance and maintenance to the mortgage. Renter dey first invest down payment and purchase fees; each month, the side wey spend less dey invest the difference. Owner's wealth for end na sale proceeds after selling fees and remaining debt, plus investments. Compare am with renter's investments for the same period.
Investment contributions happen for month end. Growth dey smooth for dis scenario; real markets no follow constant path.
Example wey show the calculation
Default example: price 400,000; 30% down; 6.5% house loan for 30 years; hold for 10 years; rent 2,000; home and rent growth 2%; purchase fees 3%; sale fees 5%; yearly ownership costs 1.5%; alternative return 5%.
Monthly house-loan payment na 1,769.79046578. Di final loan balance na 237,373.15381644 and home value na 487,597.76799790. Owner ending wealth na 226,406.27374355; renter ending wealth na 234,962.36304386. Di difference na −8,556.08930031, so renting give higher ending wealth for dis example.
Where e fit work and limits
All prices, growth rates, costs and returns na assumptions wey you fit edit, no be market forecasts. Di combined ownership rate stand for di tax, insurance and maintenance wey you choose; no count di same cost twice. Di model leave out local tax deductions, rent deposits, moving costs, borrowing restrictions and individual investment taxes.
Higher ending wealth na one modeled financial comparison, no be recommendation to buy or rent. Test negative appreciation, lower investment returns, different planning periods and realistic ownership costs.
Questions wey people dey ask often
House-loan rate fit be zero? Yes. Payment become principal divided by number of months, without dividing by zero rate.
Wetin happen after di house loan end? Di remaining balance and loan payments become zero; di comparison continue with ongoing ownership costs and investment of cash-flow differences.
House prices fit fall? Yes. Appreciation fit negative as long as e pass −100%, and ending equity fit negative.
Why answers change with investment assumptions? Money wey house tie down and differences in monthly cash flow get opportunity cost. Di alternative return wey you enter model dat assumption explicitly.
Other tools wey relate to dis
- Calculator for mortgage repayment — the usual mortgage calculation to buy house
- Calculator for loan repayment — payment, interest breakdown and schedule for one loan
- Calculator for refinancing — compare current and new loan, with break-even month
Results na estimates; dem no replace advice from qualified professional.