Rent vs Buy Calculator
Compare the true cost of buying vs renting over the years you'll stay: mortgage, taxes, maintenance, appreciation, selling costs and the renter's invested cash.
Rent vs Buy Calculator: with the default inputs, net advantage of buying is $2,243.
The single biggest driver — buying costs are front-loaded.
What the renter earns on the down payment and any monthly savings (and the owner earns if renting costs more).
Positive = buying leaves you wealthier after your stay; negative = renting does.
- Net cost of buying
- $165,699All cash out, minus what you get back when you sell.
- Net cost of renting
- $167,942All rent paid, minus investment gains on the money you didn't tie up in the house.
- Buying wins after
- Year 7
- Owner's first-year monthly cost
- $2,849
- Mortgage payment (P&I)
- $2,023
- Cash from selling at the end
- $173,101
- Renter's investment balance at the end
- $170,858
Assumptions
- Home value compounds monthly at the appreciation rate; property tax and maintenance are percentages of current value.
- Rent, insurance and HOA rise once a year at the rent-increase rate; investments compound monthly at the stated return, before tax.
- Whoever spends less in a month invests the difference; the house is sold at the end of the stay net of selling costs and the loan balance.
- No PMI, income-tax effects, capital-gains tax or rent control.
| Year | Net cost of buying | Net cost of renting | Advantage of buying |
|---|---|---|---|
| 1 | $55,451 | $23,425 | -$32,026 |
| 2 | $74,624 | $47,007 | -$27,617 |
| 3 | $93,504 | $70,764 | -$22,740 |
| 4 | $112,071 | $94,715 | -$17,357 |
| 5 | $130,307 | $118,880 | -$11,427 |
| 6 | $148,190 | $143,281 | -$4,910 |
| 7 | $165,699 | $167,942 | $2,243 |
| 8 | $182,799 | $192,878 | $10,079 |
| 9 | $199,432 | $218,084 | $18,652 |
| 10 | $215,516 | $243,534 | $28,018 |
Each row assumes you sell (or stop renting) at the end of that year.
How this is worked out
The formula
Net cost of buying = down + closing + Σ(mortgage + tax + maintenance + insurance + HOA) − (sale price × (1 − selling %) − loan balance) − owner's investment gains Net cost of renting = Σ rent − investment gains on (down + closing + monthly amount owning would have cost more) Advantage of buying = net cost of renting − net cost of buying Home value grows at the appreciation rate; rent, insurance and HOA grow at the rent-increase rate; investments compound monthly.
Open How it’s calculated above to see this worked through with your own numbers.
What you enter
- Home price
- A number.in dollars · 0 or more · defaults to 400000
- Down payment
- A number.a percentage · from 0 to 100 · defaults to 20
- Mortgage rate
- A number.a percentage · from 0 to 30 · defaults to 6.5
- Mortgage term
- A number.from 1 to 40 · whole numbers only · defaults to 30
- Years you'll stay
- The single biggest driver — buying costs are front-loaded.from 1 to 40 · whole numbers only · defaults to 7
- Monthly rent for a comparable home
- A number.in dollars · 0 or more · defaults to 2500
- Rent increase
- A number.a percentage · from 0 to 20 · defaults to 3
- Investment return
- What the renter earns on the down payment and any monthly savings (and the owner earns if renting costs more).a percentage · from 0 to 30 · defaults to 7
- Property tax(under More options)
- A number.a percentage · from 0 to 10 · defaults to 1.1
- Homeowners insurance(under More options)
- A number.in dollars · 0 or more · defaults to 1500
- Maintenance & repairs(under More options)
- 1–2% of value per year is the usual planning figure.a percentage · from 0 to 10 · defaults to 1
- HOA dues(under More options)
- A number.in dollars · 0 or more · defaults to 0
- Home appreciation(under More options)
- A number.a percentage · from -20 to 30 · defaults to 3
- Buying closing costs(under More options)
- A number.a percentage · from 0 to 15 · defaults to 3
- Selling costs(under More options)
- Agent commissions plus transfer taxes and fees.a percentage · from 0 to 20 · defaults to 6
What you get back
- Net advantage of buyingmain answer
- Positive = buying leaves you wealthier after your stay; negative = renting does.
- Net cost of buying
- All cash out, minus what you get back when you sell.
- Net cost of renting
- All rent paid, minus investment gains on the money you didn't tie up in the house.
- Buying wins after
- Owner's first-year monthly cost
- Mortgage payment (P&I)
- Cash from selling at the end
- Renter's investment balance at the end
What this assumes
- Home value compounds monthly at the appreciation rate; property tax and maintenance are percentages of current value.
- Rent, insurance and HOA rise once a year at the rent-increase rate; investments compound monthly at the stated return, before tax.
- Whoever spends less in a month invests the difference; the house is sold at the end of the stay net of selling costs and the loan balance.
- No PMI, income-tax effects, capital-gains tax or rent control.
About this calculator
"Renting is throwing money away" and "a house is a great investment" are both half-truths. Owners pay interest, taxes, maintenance, insurance and steep transaction costs that never come back; renters pay rent but keep their down payment invested. Which side wins depends mostly on how long you stay, the ratio of price to rent, and what the down payment would have earned. This calculator runs both paths month by month, sells the house at the end, and tells you which one leaves you wealthier — and by how much.
How it works
The owner pays the down payment and closing costs up front, then the mortgage, property tax, maintenance, insurance and HOA each month; the home appreciates and the loan amortizes; at the end the house is sold net of selling costs and the remaining loan. The renter pays rent that rises each year and invests the down payment and closing costs on day one. Each month, whichever side spends less invests the difference at your investment return. Net advantage of buying is the owner's ending wealth (sale proceeds plus any invested savings) minus the renter's portfolio. Negative means renting comes out ahead.
How to use it
Start with price, down payment, rate, the rent for a comparable place, and how long you realistically expect to stay. The defaults under More options are national planning figures: 1.1% property tax, 1% maintenance, 3% appreciation, 3% closing costs, 6% selling costs. Change them to your market — property tax in particular varies from 0.3% to over 2% by state. Then look at the chart: the crossing point is your break-even year.
Reading the results
- Buying wins after is the first year the owner is ahead. It is extremely sensitive to the mortgage rate and to the gap between your investment return and home appreciation. At the defaults ($400,000 home, 6.5% mortgage, $2,500 rent, 3% appreciation, 7% return) it's about year 7; with $300 less rent it slides past year 20, and at a 4% investment return it drops to year 5.
- Net cost of buying is often smaller than people expect because appreciation and principal paydown come back at sale — and often larger than expected in the first few years because of transaction costs.
- Renter's investment balance shows how much the "thrown away" comparison misses.
What isn't modeled
PMI below 20% down, the mortgage-interest deduction (most households now take the standard deduction, so it's usually zero), capital-gains tax on the home (the first $250k/$500k of gain is excluded) or on the renter's portfolio, rent control, and the value of not being able to be evicted or of not having to fix the roof. The result is a financial comparison, not a life decision.
Frequently asked questions
▸How many years do I need to stay for buying to make sense?
There's no fixed answer — it swings from three years to more than twenty depending on the price-to-rent ratio, the mortgage rate and the return you assume on the renter's investments. Buying costs roughly 3% to get in and 6–8% to get out, so stays under four years almost never recover them.
▸What is the price-to-rent ratio and why does it matter?
Home price divided by a year's rent for a comparable place. The classic rule says buying tends to win below about 15 and renting above about 20. At a 6.5% mortgage rate and a 7% investment return, this model's crossover for a seven-year stay is closer to 13 — which is why it pays to run your own numbers.
▸Why does the calculator count investment returns for the renter?
Because the down payment isn't free — money in a house can't be in an index fund. Ignoring that makes buying look better than it is. Symmetrically, if renting costs more each month, the owner invests the difference here too.
▸Does this include the mortgage interest deduction?
No. Since 2018 the standard deduction is large enough that most homeowners get no benefit from itemizing mortgage interest. If you do itemize with a large mortgage, buying is a little better than shown.
▸Why is my result negative?
A negative net advantage means renting and investing leaves you wealthier after the years you entered. That's common for short stays, high price-to-rent markets, small down payments, or high investment-return assumptions.
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