Rent vs Buy Calculator
“Is it better to rent or buy?” is really a question about how long you will stay and what the money would do elsewhere. Buying builds equity but costs more than the mortgage payment: interest, property tax, insurance, upkeep and the costs of buying and selling. Renting looks like pure expense but frees your down payment and monthly savings to be invested instead. This calculator puts the two on equal footing: the buyer spends on the home; the renter invests the same cash up front and every month invests whatever owning would have cost beyond the rent. It then compares net worth at the end of your time horizon and finds the year buying pulls ahead.
How to use the rent vs buy calculator
- Enter the home price, down payment, mortgage rate and term, then local property tax, insurance and maintenance.
- Enter the rent for a comparable home and how quickly you expect rent and home prices to rise.
- Enter the return you would earn if you invested your cash instead, and how long you plan to stay.
- Read the net-worth difference and the break-even year. Then stress-test: try lower home-price growth, a higher rent increase and a shorter stay.
Formula
Buyer net worth = home value × (1 − selling costs) − remaining loan balance. Renter net worth = investment pot, which starts with the buyer’s down payment plus closing costs and each month grows by the return and adds (owner’s monthly cost − rent). Owner’s monthly cost = mortgage payment + property tax + insurance + maintenance. The model compares the two at the end of each year, so the first year that the buyer’s figure is at least the renter’s is the break-even year.
Worked examples
A typical 10-year stay
A $400,000 home with 20% down at 6.5%, 3% annual price growth and $2,200 rent that rises 3% a year: after 10 years, renting leaves you better off by: $4,204.29. The buyer has $234,028.95 against $238,233.25 for the renter, and the break-even is not within 10 years.
A short stay
Buying and selling costs have little time to be offset in a short stay. For a 3-year stay, after 3 years, renting leaves you better off by: $30,943.58; for 20 years, after 20 years, buying leaves you better off by: $95,587.88.
Expensive rent
If comparable rent is $3,200 instead of $2,200, buying looks better sooner: break-even year 3, and after 10 years, buying leaves you better off by: $179,432.76.
What drives the decision
Sensitivity: how long you stay
| Years stayed | Result |
|---|---|
| 3 | renting leaves you better off by: $30,943.58 |
| 5 | renting leaves you better off by: $25,721.19 |
| 7 | renting leaves you better off by: $18,717.39 |
| 10 | renting leaves you better off by: $4,204.29 |
| 15 | buying leaves you better off by: $33,791.72 |
Because the full answer depends on many inputs, use the calculator and vary one assumption at a time. The break-even year is usually the most useful single figure.
Costs people forget
- Maintenance and repairs (roughly 1% of the home’s value per year)
- Property tax and insurance, which can rise
- Closing costs on purchase and agent fees on sale
- The return your down payment could have earned
Start with the home affordability calculator to see what you can borrow.
Practice problems
Try these yourself first, then check your answer. The answers come from the calculator above.
- A $350,000 home (10% down, 7% rate, 30 years), 2% price growth, $1,900 rent rising 3%, 6% investment return, 8-year stay. Buy or rent?
Show answer
After 8 years, renting leaves you better off by: $63,199.88
Common mistakes to avoid
- Comparing the mortgage payment alone with rent. Property tax, insurance, maintenance and closing costs belong on the buyer’s side.
- Ignoring what the down payment could earn. If you buy, that cash earns nothing in a portfolio — that is the opportunity cost.
- Assuming a high price growth. Home prices do not always rise, and growth near inflation is a more cautious assumption.
- Forgetting selling costs. Realtor and closing fees of 5–8% are what make short stays costly.
- Overlooking non-financial factors: stability, freedom to renovate, flexibility to move.
Frequently asked questions
How long do I need to stay for buying to make sense?
Often around five to seven years or more, because buying and selling costs have to be spread over time. The calculator’s break-even year shows it for your numbers.
Does this include tax deductions?
No. Mortgage-interest and property-tax deductions depend on your tax situation and are left out for simplicity; they would tilt results towards buying.
Why does the renter invest money?
Because the cash you do not spend on a down payment and on owning costs could be invested. Leaving that out would unfairly favour renting.
What if home prices fall?
Set home price growth to 0% or negative to see it. Buying becomes much less attractive over short horizons.
Which assumptions matter most?
Time horizon, home price growth, rent growth and the investment return. Test each one.
Is this financial advice?
No. It is an educational model with many simplifications; consult a qualified adviser for a decision this big.
By Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Last reviewed September 26, 2026. Found a mistake? Tell us; see our editorial policy.