Rent vs Buy Calculator — Davao Philippines

Rent vs Buy Calculator — Davao

Compares the total cost of renting vs buying a Davao property over a chosen horizon. Accounts for down payment, mortgage interest, appreciation, and the equivalent rent you would have paid instead.

Data as of May 2026 · PH mortgage rates + Davao appreciation/rent-growth benchmarks (tool-params.json)

Methodology, formula + sources

How this is calculated

Cumulative cost of buying vs renting over your chosen horizon. The buy side is the cash you have sunk minus the equity you actually hold (appreciation); the rent side is every peso of rent paid, compounded by annual rent growth — not held flat. The crossover year is the first year buying costs you less in total than renting would have.

Formula

M = P·r·(1+r)^n / ((1+r)^n − 1)   (r = annualRate/12, n = years×12)
buyY = downPayment + closingCost + M×12×min(Y, loanTerm)
       + (dues + RPT + maint)×12×Y − price×((1+appreciation)^Y − 1)
rentY = Σ_{k=1..Y} monthlyRent×12×(1 + rentGrowth)^(k−1)
crossover = first Y where buyY ≤ rentY

Constants + data sources (each dated)

Value used	Source	As of
Default mortgage rate: 7% (slider 3–12%; Pag-IBIG 3% socialized / 4.5% promo if you qualify)	Pag-IBIG / BSP disclosures	2026-05
Appreciation (mid): 4.5%/yr	Bamboo Routes Davao	2026-05
Rent growth (mid): 4.5%/yr (compounded)	Bamboo Routes Davao	2026-05
Buyer closing cost: 4% of price (DST 1.5% + transfer tax ~0.75% + registration + notarial)	Statutory (DST + transfer tax + registration + notarial)	2026-05

Worked example (reproduce this by hand)

₱5,000,000 price, 20% down (₱1,000,000), 4% buyer closing (₱200,000), 7% over 20 yr, ₱25,000 equivalent rent, appreciation + rent growth 4.5%, ownership carry ₱0. Horizon: year 10.

loan P = 4,000,000 → M = ₱31,012/mo
buy₁₀ = 1,000,000 + 200,000 + 31,012×120 − 5,000,000×(1.045¹⁰−1)
= 1,200,000 + 3,721,440 − 2,764,847 ≈ ₱2,156,593
rent₁₀ = Σ 25,000×12×1.045^(k−1), k=1..10 ≈ ₱3,686,463

→ At year 10 buying ≈ ₱2,156,593 vs renting ≈ ₱3,686,463 — buying ahead by ~₱1.53M (adding ownership carry narrows this)

Assumptions

Amortisation stops at payoff: M is charged for min(Y, loan term) years, while carry + appreciation continue for the full horizon.
Rent compounds at the rent-growth rate; it is never held flat.
Defaults are read live from tool-params.json, not hardcoded in the component.

Known limits — what this does not model

Opportunity cost on the down payment if invested elsewhere — mentally add ~4–6%/yr to the buy side.
Capital gains tax + ~6–8% seller-side costs if you exit at horizon end (buyer closing is modelled; seller-side is not).
Condo special assessments, RPT reassessment hikes, and the time/stress of managing the property.

Last verified 2026-05-19 · Next review Financing + Davao market quarterly

Why the answer changes with time horizon

Buying carries large upfront costs (down payment, transfer tax, registration) that take years to amortise. Each early year you mostly pay interest, not principal. Renting wastes nothing upfront but builds no equity.

The crossover point — when buying total cost falls below renting total cost — depends most on:

How long you stay (under 5 years rarely makes buying win in PH).
Mortgage rate vs annual property appreciation (a 6.5% rate vs 5% appreciation closes the gap slowly).
Whether the rent equivalent is realistic — undershooting rent makes buying look worse than it is.

Frequently asked questions

When does buying beat renting in Davao?

Usually around year 7–10 if you stay put, prices appreciate 4–6% annually, and your mortgage rate is at or below 7%. Shorter horizons almost always favour renting because closing costs, interest, and selling costs eat the early years of equity.

What mortgage rate should I use?

PH bank housing-loan rates in May 2026 run 6.75–9.5% for prime borrowers; Pag-IBIG is 3% socialised / 4.5% promo for qualifying members. The 7% default reflects a strong bank applicant — drop it toward 4.5% if you qualify for Pag-IBIG, or raise it for a conservative scenario.

Does it model rent inflation and ownership carrying costs?

Yes. Renting compounds at the rent-growth rate you set (Davao mid ~4.5%/yr), so the renting line is not flat. Buying adds one-time closing costs (DST + transfer tax + registration, ~4% buyer-side) plus a monthly ownership carry for condo dues + RPT + maintenance — leave that at ₱0 and the tool warns you it is flattering buying.

Does this account for opportunity cost on the down payment?

No. The down payment is treated as out-of-pocket cash that simply stops being available. If you would otherwise invest that capital, mentally add a 4–6% annual opportunity cost to the buy side before deciding.

What about the cost of selling later?

Not modelled. Buyer closing costs are included, but if you plan to sell at the end of your horizon, add ~6–8% of sale price for capital gains tax + broker commission on the buy side before comparing.

These estimates are for budgeting. Confirm current rates and legal terms with your provider or a Davao-based lawyer for binding decisions.

Rent vs Buy Calculator — Davao

Why the answer changes with time horizon

Frequently asked questions

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