About the Rent vs Buy Calculator
This rent vs buy calculator answers the question fairly: after a given number of years, will you be wealthier if you buy a home or keep renting and invest the difference? It counts every major cost of owning — mortgage payments, property tax, insurance, maintenance, HOA dues, closing costs and the cost of selling — against rent that rises each year, and it credits the renter with investment returns on the down payment they did not spend.
It is for renters weighing their first purchase, people relocating for a job who may only stay a few years, and anyone told that "rent is throwing money away." The year-by-year chart shows the break-even point: how long you need to stay for buying to beat renting.
Each month, whichever option is cheaper invests the savings at your chosen return, so both sides spend the same total. Results depend heavily on appreciation, rent growth and how long you stay. Taxes on investment gains and the mortgage interest deduction are ignored for simplicity.
With the default inputs, the buying advantage after your stay is −$8,861.91. Change any value above to recalculate instantly.
How to use the rent vs buy calculator
- 1Enter the price of a home you would buy and the rent for a comparable place.
- 2Set your down payment, mortgage rate and loan term.
- 3Choose how many years you expect to stay — this matters more than anything else.
- 4Adjust appreciation, rent growth and investment return to match your market.
- 5Review ownership costs (tax, maintenance, insurance, HOA, closing and selling costs).
- 6Read the verdict and break-even year, then test more pessimistic assumptions.
Formula and method
The calculator runs month by month. The monthly cost of owning is the mortgage payment plus one-twelfth of property tax and maintenance (both a percentage of the home’s value that year), insurance and HOA dues. The monthly cost of renting is rent (rising once a year) plus renters insurance. Whichever is cheaper that month invests the difference at the investment return, so both paths spend the same money.
The renter starts by investing the down payment and closing costs the buyer spent. At the end, the buyer’s net worth is the appreciated home value minus selling costs and the remaining loan balance, plus any savings; the renter’s is their investment account. The difference is the buying advantage. Taxes on gains and the mortgage interest deduction are not modelled.
- value
- Price × (1 + appreciation)^years
- return
- Annual investment return, compounded monthly
Worked examples
$350k home vs $1,800 rent for 10 years
Owning costs about $2,507 a month versus $1,800 rent, and the renter invests both the $80,500 upfront cash and the monthly difference at 5%. After 10 years the home is worth about $470,371, but after 6% selling costs and the remaining loan the buyer is about $8,862 behind the renter.
Same home, but you move after 5 years
Over a short stay, closing and selling costs dominate: buying leaves you about $25,664 worse off than renting and investing. Short stays usually favor renting.
$500k home vs $2,500 rent over 15 years, 4% appreciation
With stronger appreciation and a longer stay, the home grows to about $900,472 and the paid-down loan builds equity. After selling costs the buyer ends roughly $98,673 ahead of the renter.
Frequently asked questions
Is it better to rent or buy a house?+
Neither is always better. Buying tends to win when you stay many years, homes appreciate steadily and rent is high relative to prices. Renting often wins for short stays, in expensive markets, or when you invest your savings consistently.
How long do I need to stay for buying to make sense?+
Because buying and selling cost roughly 8%–10% of the price combined, many markets need 5–7 years or more to break even. The break-even year above shows the figure for your own assumptions.
Is rent really throwing money away?+
No. Rent buys housing, just as mortgage interest, property tax, insurance and maintenance do for owners — none of those build equity either. The fair comparison is total unrecoverable costs, which this calculator captures.
What is the price-to-rent ratio?+
It is the home price divided by a year of rent for a similar home. Ratios under about 15 generally favor buying, and ratios above about 20 tend to favor renting. The default example has a ratio of about 16.
Why does the investment return matter so much?+
The renter keeps the down payment and closing costs invested instead of tied up in a house. At a higher return, that money grows faster, raising the bar the home must clear through appreciation and principal paydown.
Does this include the mortgage interest tax deduction?+
No. With the higher standard deduction most homeowners no longer itemize, so the benefit is small for many buyers. If you do itemize, buying looks somewhat better than shown here.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.