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Rent vs. Buy Calculator

Rent vs. Buy Home Calculator

Rent or buy home? Use our rent vs. buy calculator to compare loan amounts, interest rates and monthly payments, which include principal, interest, insurance and taxes.

Frequently Asked Questions

The pros of renting are:
  • Lower upfront costs, with no downpayment or closing costs (although not all mortgages require a downpayment, and some allow you to roll closing costs into the loan.)
  • No property taxes or surprise maintenance expenses.
  • Flexibility to move easily, with less dependence on whether it’s a good time to sell your home.
The cons of renting are:
  • Not building equity or benefitting if the value of your home goes up over time.
  • Potential rent increases or your lease not being renewed.
  • Limited ability to customize a rental property like you could a home you own.
The pros of buying are:
  • Building equity as a long-term investment.
  • Potential tax benefits.
  • Freedom to customize your home to a larger extent than renting.
The cons of buying are:
  • Higher upfront costs, including a downpayment and closing costs (although not all mortgages require a downpayment, and some allow you to roll closing costs into the loan.)
  • The cost of property taxes and maintenance expenses.
  • Less flexibility and speed if you need or want to move.
To learn more, check out this article: Rent vs. Buy: Pros and Cons.
Mortgage lenders like United take several factors into consideration, including your credit score, debt-to-income ratio, employment history, and assets. You can get a free copy of your credit report every 12 months from each of the three nationwide credit bureaus—Equifax, Experian, and TransUnion—by visiting
It depends on your financial situation and the lifestyle you’d like to maintain in retirement. The upsides of renting in retirement include:
  • Steady monthly payments, without unexpected maintenance expenses.
  • Freeing up cash for other types of investments or an emergency fund.
  • The flexibility of being able to move more easily if you need or want to.
The main downside to renting is that you’re not building equity or benefitting if the value of your home goes up over time.
It will depend on a number of factors, including the interest rate, how much you have for a down payment, your current income, and your current debt.

The interest rate on a fixed-rate mortgage stays the same throughout the life of the loan. With a fixed-rate mortgage, you don’t have to worry about your rate going up and causing a bigger monthly payment than you’ve planned on.  
Conventional loans are offered by banks and other private lenders with no guarantee from the government that they’ll be paid back. Government-backed loans are also offered by banks and other private lenders, but the government guarantees they’ll re-pay the loan if the borrower doesn’t.

There are three types of government-backed mortgages:
  • FHA loans are guaranteed by the Federal Housing Administration to make homebuying more affordable, especially for first-time homebuyers. FHA loans have lower interest rates and lower credit score and downpayment requirements than conventional loans.
  • VA loans are guaranteed by the Department of Veterans Affairs to help active-duty service members and veterans buy a home. VA loans have lower interest rates and credit score requirements than conventional loans. There’s no down-payment or private mortgage insurance (PMI) requirement.
  • USDA loans are guaranteed by the US Department of Agriculture to stimulate development in rural areas. USDA loans have lower interest rates and credit score requirements than conventional loans and no down-payment requirement.
United Community offers our PATH loan to help more people buy homes, especially in underserved communities. (PATH stands for “Possibilities Achieved Through Homeownership.”)

PATH loans don’t have a down-payment requirement, meaning you can move forward with buying a home even if you haven’t saved up for a down-payment. PATH also doesn’t have a private mortgage insurance requirement, so more of the money you pay each month goes toward paying down the money you borrowed to buy the home.
It's a letter from a mortgage lender like United that provides an estimate of the amount you pre-qualify for based on financial information you have provided so far. You can use the letter to show real estate agents and home sellers that you’re a serious homebuyer. It’s not a guarantee that your loan will be approved, but it indicates you’re well on your way.
After you apply for a loan, your mortgage loan originator will ask if you want to lock in your interest rate. It’s a lender’s guarantee that your interest rate won’t change for a certain period of time, even if market rates go up. The lock is a holding period designed to last throughout the mortgage process and closing day.
Do your best to pay your bills on time and keep your credit card balances as low as you can. As you pay off credit cards, keep them open to show your good payment track record. If you’re in trouble with credit card debt, consider talking to a credit counselor.

Get seven more tips for improving your credit score.
Amortization, escrow, FICO score. Learning about the mortgage process can feel like learning a whole new language. We’ve put together this mortgage glossary to help with the translation. Bookmark it for quick reference and ask your mortgage lender as many questions as it takes to make homebuying decisions with confidence.
If homebuying is your goal, you can take several steps toward it at your own pace.
  • Start saving for the downpayment, even if you can’t save much.
  • Try to reduce your debt-to-income ratio (DTI).
  • Keep an eye on property values where you want to buy. It’s possible they’ll go down over time and become more affordable.
  • Wait for lower interest rates to reduce your monthly payment.
  • Look into home affordability solutions like government-backed loans, including VA mortgage loans, PATH loans and downpayment assistance.
Your monthly mortgage payment determined by:
  • Loan amount
  • Interest rate
  • Loan term
  • Property taxes
  • Homeowner’s insurance
  • Private Mortgage Insurance (PMI), if your lender requires it
Generally, the lower your loan amount and interest rate, and the longer your loan term, the lower your monthly payment will be.

To learn more, check out this article: Your Monthly Mortgage Payment
The answer is different for everyone, but the 28%/36% rule is a widely accepted guideline. It means that your mortgage payment shouldn’t be more than 28% of your gross monthly income (before taxes), and you shouldn’t have more than 36% of your gross monthly income going to other debts.

As an example, let’s say your gross monthly income is $3,000. That means your mortgage should be no more than $840. Your other debts should be no more than $1,080. Make sure you have enough monthly income left over to cover necessities and save for an emergency.
  1. The information presented in these calculators is for general and educational purposes only, and is not intended to provide legal, tax, lending or investment advice. Loan scenarios are not an application and not a commitment to lend. This information is meant to serve as estimates and may vary depending on certain conditions and restrictions. Annual Percentage Rates used within this tool are strictly informational and may not be the current advertised rates. Rates provided may be higher or lower and are in no way a binding agreement with United Community Bank.

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