Rent vs Buy Calculator
Is it cheaper to rent or buy a home? Enter your numbers below to compare the true cost of each option over the years you plan to stay — including mortgage, taxes, maintenance, home appreciation, and the lost-investment cost of your down payment.
If you buy
If you rent
Time horizon
Verdict
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Net cost to buy
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Net cost to rent
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Home equity at sale
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Monthly mortgage (P&I)
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Break-even point
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Year-by-year comparison
| Year | Net cost rent | Net cost buy | Home equity | Winner |
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How this calculator works
Comparing rent and buy is really comparing two streams of cash over time. The calculator tracks every dollar going in and out under each scenario, then subtracts what you get back at the end (home equity for the buyer, investment growth for the renter).
- Home price & down payment — the price you’d pay and the percentage you’d put down. The rest is financed.
- Mortgage rate & term — used with the standard amortizing-loan formula to compute the monthly principal-and-interest payment.
- Closing costs — one-time fees when you buy (typically 2–5% of price).
- Property tax, insurance, maintenance — annual carrying costs expressed as a percent of the home’s current value. Maintenance is the costliest hidden expense of ownership; a common rule of thumb is 1% of value per year.
- HOA — monthly homeowners-association or condo dues (zero for most single-family homes).
- Home appreciation — how fast you expect the home to grow in value. Long-run U.S. average is around 3–4% per year, though it varies wildly by market.
- Selling cost — what it costs to sell when you leave (realtor commission + closing fees, typically 6–8%).
- Monthly rent & annual increase — the current rent for a comparable home and how fast you expect it to rise.
- Investment return — what a renter could earn by investing the down payment and closing costs they didn’t spend. This is the buyer’s “opportunity cost” of tying up capital in a home.
- Years you’ll stay — the single most important variable. Buying almost always loses if you sell within 3–4 years because closing and selling costs swamp the equity you build.
How the verdict is calculated: the buyer’s net cost is total out-of-pocket (down payment, closing, mortgage, taxes, insurance, maintenance, HOA) minus the home’s resale value net of selling costs and the remaining mortgage. The renter’s net cost is total rent paid (with annual increases) minus what they would have earned by investing the down payment and closing costs at your assumed market return. Whichever number is lower wins.
This calculator ignores income-tax effects (mortgage-interest and SALT deductions, capital-gains exclusions on a primary residence) and PMI for down payments under 20%. It assumes constant rates, contributions at the end of each month, and that all input percentages stay flat year over year. Real outcomes vary; treat the result as a starting point for thinking, not financial advice.
The rent vs. buy debate is one of the most consequential financial decisions most people ever face, and it almost never has a universal answer. The right choice depends entirely on your specific numbers: the home price, your down payment, how long you plan to stay, local rent levels, and what you’d earn if you invested the down payment instead. This calculator runs the full comparison, tracking every dollar in and out under both scenarios and arriving at a clear verdict — along with the year-by-year breakeven point where buying overtakes renting or vice versa.
Home price and down payment — the purchase price and the percentage you’d put down. The down payment drives two things simultaneously: it reduces the loan amount and monthly mortgage payment, and it represents money that leaves your investment portfolio and gets tied up in home equity. Both effects are accounted for in the comparison.
Mortgage rate and loan term — used to calculate the monthly principal-and-interest payment using the standard amortizing-loan formula. The 30-year term is the default because it’s the most common, but shortening it dramatically reduces total interest at the cost of a higher monthly payment.
Closing costs — one-time fees due at purchase, typically 2–5% of the home price, covering lender fees, title insurance, escrow, and prepaid items. These are paid upfront and never recovered, which is one reason buying loses financially if you move too soon.
Property tax, home insurance, and maintenance — annual carrying costs expressed as a percentage of the home’s current value, so they grow as the home appreciates. Maintenance is the most commonly underestimated cost of ownership; the standard rule of thumb is 1% of home value per year, though older homes often run higher.
HOA and condo fees — monthly dues paid to a homeowners association or condo board. Enter zero for most single-family homes.
Home appreciation — the annual rate at which the home grows in value. This directly affects your equity at sale and is the primary financial argument for buying. The long-run U.S. average is roughly 3–4% per year, but it varies dramatically by market and time period.
Selling cost — what it costs to exit the home when you move: realtor commissions plus closing fees on the sale side, typically 6–8% of the sale price. This is the other reason short holding periods tend to favor renting — selling costs are large and you have to earn them back through appreciation and equity before buying comes out ahead.
Monthly rent and annual rent increase — the current rent for a comparable home and how fast you expect it to grow each year. Rising rents strengthen the case for buying; flat rents strengthen the case for renting.
Investment return — what a renter could earn by investing the down payment and closing costs in a diversified portfolio rather than a home. This is the buyer’s opportunity cost, and it’s the variable most people forget to account for. At 7% annually, a $80,000 down payment grows meaningfully over a decade — that growth is subtracted from the renter’s net cost, making renting look more competitive than a simple rent-versus-mortgage comparison would suggest.
Years you’ll stay — the most important input in the entire calculator. Buying almost always loses on a short time horizon because upfront and selling costs dwarf the equity built in the early years of a mortgage. The break-even point shown in the results is the year buying first becomes cheaper than renting under your assumptions.
If buying wins, find out exactly how much house you can qualify for with the Mortgage Affordability Calculator.
From there, the Loan Payment Calculator breaks down your monthly principal, interest, and total cost of the mortgage.
A home purchase changes your net worth significantly on both the asset and liability side — track the shift with the Net Worth Calculator.
This calculator excludes income-tax effects such as the mortgage-interest deduction, SALT deduction, and the capital-gains exclusion on a primary residence. It does not model PMI for down payments under 20%. All rates are assumed constant year over year. Treat results as a starting point for thinking, not a precise forecast. This is not financial advice.