Mortgage Definition
Price-to-Rent Ratio
The ratio of home price to annual rent (home price ÷ (monthly rent × 12)). A ratio above 20 typically favors renting; below 15 typically favors buying. Used to compare the relative cost of owning vs renting.
Why it matters
This concept influences either your monthly payment, your upfront cash requirements, or your risk profile over time. Knowing the definition helps you make cleaner rent-vs-buy decisions.
Related terms
Related tools
- Mortgage Calculator
Estimate principal, interest, taxes, insurance, and PMI in one payment view.
- Affordability Calculator
Validate your target budget and debt-to-income range before making offers.
- Closing Costs Calculator
Estimate cash-to-close so you can compare monthly and upfront costs together.
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