Rent vs Buy Calculator
This rent vs buy calculator compares the full cost of renting with the full cost of buying a home over the number of years you plan to stay. It weighs your mortgage, taxes, maintenance, and the money tied up in a down payment against rising rent, then tells you which choice costs less and by how much.
Quick answer
Buying has large upfront and selling costs, so a short stay often favors renting.
What this tells you
- •Buying has large upfront and selling costs, so a short stay often favors renting.
- •Renting frees up your down payment to invest, which the calculator counts against buying.
- •The longer you stay, the more buying tends to win as you build equity and rent keeps rising.
How to Use
- 1Enter the home price, your down payment percentage, and the mortgage rate.
- 2Enter the monthly rent for a comparable place and how many years you plan to stay.
- 3Adjust the assumptions for appreciation, rent growth, and investment return if you want.
- 4Calculate to see the lower-cost choice and the total cost of each path.
How It Works
Formula
Cost to Buy = Upfront Cash + Mortgage Paid + Ownership Costs + Opportunity Cost - Net Sale Proceeds
Cost to Rent = Total Rent Paid (grown each year)
Lower total winsBuying adds up your down payment and closing costs, every mortgage payment, the property tax, maintenance, and insurance you pay while you own, plus the investment return you give up by tying cash in a down payment. It then subtracts what you net when you sell. Renting is the total rent you pay over the same years. Whichever total is lower is the cheaper choice.
Calculation note: values are processed in the order shown above, using the current input units.
Worked Examples
Short stay favors renting
Long stay favors buying
What Tips Rent vs Buy
The levers that move the answer most, and which way each one pushes.
| Factor | Pushes Toward Renting | Pushes Toward Buying |
|---|---|---|
| Years you stay | Short (under 5) | Long (7+) |
| Home appreciation | Low or flat | Strong |
| Rent growth | Slow | Fast |
| Investment return | High | Low |
| Buying and selling costs | High | Low |
No single number decides it. The years you plan to stay is usually the biggest factor, since selling costs are paid only once but spread over your whole ownership.
How This Rent vs Buy Calculator Works (Assumptions and Methodology)
The buying side sums four things and subtracts one. It adds your upfront cash (down payment plus closing costs, set at 3% of the price by default), every mortgage payment you make while you live there, the ownership costs you carry each year (property tax plus maintenance and insurance, applied to the home value as it appreciates), and the opportunity cost of your down payment. That opportunity cost is the return you would have earned by investing the cash instead, which is the fair way to compare against a renter who keeps that money invested. From this it subtracts your net sale proceeds, which is the future home value minus selling costs (6% by default) minus the loan balance left at sale.
The renting side is simpler. It totals the rent you pay over the same years, growing it each year by the rent increase rate you set. Security deposits and renters insurance are small and left out. Whichever total is lower is the cheaper path, and the calculator reports the gap between them.
Two assumptions move the result the most: how long you stay and how fast the home appreciates. Defaults here are deliberately moderate (3% appreciation, 3% rent growth, 4.5% investment return) so the answer is not skewed by an optimistic forecast. Change them to match your market and rerun. The calculator compares total cost only. It does not score the flexibility of renting or the stability of owning, which are real but personal.
Common mistakes
- Comparing rent only to a mortgage payment, ignoring tax, maintenance, and insurance
- Leaving out the selling costs you pay when you eventually move
- Forgetting that the down payment could have been invested instead
- Assuming aggressive home appreciation to make buying look better