How this is calculated

Estimated monthly owner cost = (home price − down payment) × 6% ÷ 12 + home price × 1.2% ÷ 12. The first term is a planning mortgage payment at a 6% annual rate on the amount borrowed; the second estimates ownership costs such as property tax and insurance at 1.2% of the home price a year. Enter your actual mortgage rate and your local tax and insurance figures for a closer number.

Worked example

A $300,000 home with a $60,000 down payment gives a borrowed amount of $240,000. At 6% that is 240000 × 0.06 ÷ 12 = $1,200, plus 300000 × 0.012 ÷ 12 = $300, for an estimated $1,500 a month. Compare that with the rent you would otherwise pay.

What this comparison leaves out

A rent-versus-buy decision also involves closing costs, maintenance, insurance, taxes, appreciation, selling costs, opportunity cost, and how long you expect to stay. Add local figures before making a decision.

FAQ

Is lower monthly cost always better?

No. Flexibility, upkeep, liquidity, and the long-term opportunity cost of a down payment matter too.

Are these mortgage terms?

This quick comparison uses a planning rate assumption and is not a lender quote.