Rent vs Buy Calculator

The headline figure is the dollar gap between the net cost of renting and the net cost of buying over the years you specified, assuming you sell the home at the end of that period. A positive "buying costs less" result means the equity and appreciation you built exceeded what the down payment would have earned if invested instead, net of all the extra costs of ownership.

The single most important input is how long you expect to stay. Buying carries large upfront and exit costs, so short stays usually favour renting even in a rising market.

Enter your current rent and a realistic annual increase, then the purchase scenario you are actually considering. The investment return field matters more than people expect: money used for a down payment is money that could have been invested, and the calculator credits renters with that opportunity cost.

Maintenance is the cost owners most often underestimate. One percent of home value per year is a common planning figure, higher for older homes.

Run the calculation twice with pessimistic and optimistic appreciation to see how sensitive the answer is to something nobody can predict.

Both sides are reduced to a net cost over the holding period.

Net cost of renting = total rent paid − investment gain on the cash you did not spend

Net cost of buying = upfront cash + all ownership costs − net proceeds when you sell

Rent grows geometrically each year:

Rent in year t = annual rent × (1 + g)^(t − 1)

Home value grows the same way, and net sale proceeds are the future value less selling costs less the remaining loan balance. The break-even year is the first year in which the net cost of buying is no greater than the net cost of renting.

Renting at $2,200/month with 3% annual increases costs about $205,000 over seven years. The renter also keeps $92,000 (20% down plus 3% closing costs on a $400,000 home) invested; at 5% that grows to roughly $129,000, a gain of $37,000. Net cost of renting: about $168,000.

The buyer pays $92,000 upfront and roughly $274,000 in mortgage, tax, insurance and maintenance over seven years. The home appreciates to about $492,000; after 6% selling costs and paying off the remaining balance, they recover roughly $175,000. Net cost of buying: about $191,000 — meaning renting is modestly cheaper at seven years in this scenario, with buying pulling ahead a few years later.

Length of stay

The main lever. Every other input matters less than how many years you hold the property before the fixed costs of buying and selling are amortized.

Financing cost

Interest rate and loan term determine how much of each payment builds equity versus disappears as interest, especially in the early years of a mortgage.

Local rent and price trends

Rent growth and appreciation are set locally, not nationally. A calculator can only apply the assumptions you give it.

Transaction costs

Buying and selling both carry costs that renting avoids entirely — this is what makes short-term buying expensive relative to renting.

Alternative use of cash

The opportunity cost of the down payment depends on what else you would realistically do with that money.

• Ignoring the opportunity cost of the down payment

  Comparing only monthly rent to a mortgage payment overstates buying's advantage by ignoring what the cash down payment could otherwise earn.

• Underestimating maintenance

  New owners often budget only for the mortgage, tax and insurance, then are surprised by repairs, replacements and general upkeep.

• Assuming one appreciation rate is certain

  Treating a single appreciation guess as fact rather than testing a range can make a close decision look one-sided.

• Forgetting selling costs

  Commissions and closing costs on the sale side, often 6-10% combined, can erase years of appreciation if you sell soon after buying.

• Skipping the tax caveats

  The mortgage interest deduction only helps if you itemize, and its value depends on your bracket and the standard deduction — it is not automatic.

• Run the numbers with a short, a medium and a long expected stay to see how sensitive the decision is to your timeline.
• Use a realistic, not optimistic, appreciation assumption — often close to long-run local inflation.
• Include renters insurance and HOA fees on both sides where relevant so the comparison is apples-to-apples.
• Treat the break-even year as an estimate, not a guarantee — it moves if rates, rents or prices change after you buy.
• If the decision is close, weight non-financial factors like stability, flexibility and maintenance responsibility more heavily.

This tool ignores taxes, PMI and one-time items like moving and furnishing, and it assumes constant annual growth rates rather than the real up-and-down path rents and home prices actually follow. Your real decision may also hinge on factors with no dollar value, such as the stability of a fixed housing payment or the flexibility to relocate for work.

What this calculator assumes

• You sell the home at the end of the period and pay selling costs.
• Rent, home value and investment returns grow at constant annual rates.
• The mortgage is fixed-rate with no extra principal payments.
• Maintenance is a constant percentage of the home's current value.

What it does not account for

• Tax effects, including the mortgage interest deduction and capital gains exclusion.
• PMI, which applies on down payments below 20%.
• Moving costs, furnishing, and the value of flexibility or stability.
• Rental income from part of the property, and local market divergence from your assumptions.

• Consumer Financial Protection Bureau — Buying a house — General homebuying guidance and cost disclosures.
• IRS — Home Mortgage Interest Deduction — Rules and limits on deducting mortgage interest.