Rent vs Buy Calculator

Rent or buy a home: compare the long-term financial outcome

A mortgage payment and a rent payment do not tell the whole story. Buying builds home equity, but it also ties up your down payment and brings maintenance, property taxes and transaction costs. Renting leaves more money available to invest in some scenarios. This rent vs buy calculator compares the estimated net wealth of both options over the number of years you expect to stay, using your own housing costs and growth assumptions.

How to use the rent vs buy calculator

1. Enter the purchase price and monthly rent for comparable homes in the same area. Choose one currency for all amounts; changing the currency label does not convert your inputs.
2. Set your down payment, annual mortgage rate, mortgage term and expected years of residence. The loan term and the time you plan to stay can be different.
3. Open the cost and growth assumptions. Adjust property tax, insurance, maintenance, purchase and selling costs, home appreciation, rent increases and investment returns.
4. Review the wealth difference, chart and yearly table. Try a shorter stay, lower appreciation or a different investment return to see how sensitive the result is to your assumptions.

The costs of buying a home go beyond the mortgage

The monthly mortgage result includes principal and interest on a fixed-rate loan. Principal repayments reduce your debt rather than disappearing as an expense. Property tax and maintenance are calculated as percentages of the changing home value, while annual insurance stays fixed. Purchase closing costs are paid upfront, and selling costs are deducted from the future sale price. These transaction costs can make a short period of ownership relatively expensive.

How home equity and the renter’s investments are compared

Both options start with equal capital and use the same monthly budget. The renter invests the amount the buyer spends on the down payment and purchase closing costs. Each month, whichever option has lower housing costs invests the difference. Buyer net wealth includes those investments plus the home’s sale value, less selling costs and the remaining mortgage. Renter wealth is the investment balance. The comparison measures estimated wealth, not just total payments or monthly savings.

What does the rent vs buy break-even year mean?

The break-even result is the first year-end at which buying produces at least as much net wealth as renting within your selected period. It assumes the home is sold at that point. A later move gives buying more time to offset transaction costs, but does not guarantee it will win. The advantage can reverse as rents, home values and investments grow at different rates. Check the full yearly table rather than relying on the first crossover alone.

Assumptions to check before making a decision

Rent changes annually; home values and investments grow monthly at rates equivalent to your annual assumptions. The model excludes tax deductions, taxes on investments, homeowners association fees, mortgage insurance and moving costs. Results are nominal amounts, not adjusted for inflation. Use local quotes and realistic estimates, and consider flexibility, repair responsibilities and the cash reserve you would need after buying.

Renting vs buying: frequently asked questions

Explore your housing and investment assumptions

Use the mortgage calculator to examine loan payments, the investment calculator to explore returns, and the inflation calculator to understand how purchasing power changes.

• Mortgage Calculator
• Investment ROI & CAGR Calculator: Solve the Return
• Inflation Calculator