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Rent vs Buy: Single Filer + FHA Loan
Compare renting vs buying with a 30-yr FHA loan for single filer. Factor in costs, taxes, MIP & investments to see which option costs less over time.
Last update Dec 2024
- Scenario 1: Cost of Homeownership
- Scenario 2: Cost of Renting
- Which One Is Higher (%)
This chart shows the total cost of living under two scenarios, factoring in missed investments, rent increases, taxes, and equity growth. The higher curve shows the costlier option.
Read more from author: https://docs.moneyeva.com/examples/common-use-cases/#1-rent-vs-buy-analysis
# Years from Now
Try your numbers:
Enter the total price of the home you plan to buy. This value determines your loan amount, upfront costs, and appreciation over time.
A =
Enter the percentage of the purchase price you plan to pay upfront. FHA loans require a minimum of 3.5%. With 10%+ down, Annual MIP drops off after 11 years.
B =
Enter the FHA Upfront Mortgage Insurance Premium rate, typically 1.75% of the loan amount. This fee is added to the total financed loan.
C =
Enter the annual Mortgage Insurance Premium rate, usually 0.85% for FHA loans. MIP lasts 11 years if down payment is 10% or more; otherwise, it’s for the loan's life.
D =
Enter the annual interest rate on your loan. FHA loans often offer competitive rates but include added MIP costs.
E =
Enter additional upfront buying costs like closing fees, legal fees, and prepaid expenses.
F =
Enter the annual property tax rate as a percentage of the home price. This is an ongoing homeownership cost based on local rates.
G =
Enter the monthly HOA or strata fees if applicable. These cover shared property maintenance and amenities.
H =
Enter the estimated monthly cost of maintaining your home, including repairs, landscaping, and other upkeep expenses.
I =
Enter your current monthly rent payment. This will be compared against the cost of owning a home with an FHA loan. Rising rent costs impact the long-term cost of renting.
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Enter the expected annual increase in your home’s value. Appreciation builds equity and impacts long-term wealth.
K =
Enter your marginal income tax rate. This rate is used to calculate the tax savings from deductible costs like mortgage interest and property taxes. It reflects the tax you pay on each additional dollar of income.
L =
Enter the tax rate for capital gains when selling your home. Single filers get a $250,000 exemption on gains from their primary residence.
M =
Enter the percentage of savings allocated to tax-advantaged accounts like IRA or Roth IRA, which grow tax-free or tax-deferred.
N =
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- AmountAny single amount ($).
- Cash FlowRent, insurance premium, salary, ...
- Current AssetReal estate, commodity, bonds, ...
- Installment LoanMortgage, car loan, ...
- PercentageAny percentage value (%).
- Years / MonthsAny time horizon.
- AgeShow "Age" instead of "# Years from Now."
- Retirement Age (requires Age)Enable "Investment Return After Retirement."
Time Value Assumptions
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How is Cash Value calculated?
When buying with an FHA loan, upfront costs include the down payment, closing costs (Upfront MIP is rolled into the loan). Ongoing costs include mortgage payments, property taxes, maintenance, and Annual MIP. If down payment is 10%+, MIP ends after 11 years; otherwise, it lasts for the loan term. Home appreciation builds equity; at sale, capital gains tax applies to gains over $250K. The final cost equals the missed investment value of all costs minus appreciated home equity.
Decisions / Expectations
(Expressions are evaluated at Year 0 only.)
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Calculations
(Expressions are evaluated at every year.)
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- Buy AssetBuy an asset growing at its own rate.
- Take Installment LoanTake a mortgage, loan, etc.
- InvestReceive/Spend a lump sum.
- Expect to InvestExpect to receive/spend a lump sum.
- Expect Monthly Cash FlowExpect to receive/spend cash monthly.
- Expect Yearly Cash FlowExpect to receive/spend cash yearly.
- Define Variable (Numerical)Calculate an intermediate value.