Rent vs buy calculator
Compare what you would spend renting with what you would spend owning — including tax, insurance, maintenance, rent growth and the equity you build — over the years you plan to stay.
Excludes closing costs, selling costs, tax deductions, HOA and investment returns on the difference.
How this calculator works
Rent and buy are not comparable as monthly payments alone. A mortgage payment is part cost (interest, tax, insurance, maintenance) and part forced saving (principal). Rent is all cost, but it buys flexibility and avoids maintenance bills. The fair comparison is total cash out over the same period, adjusted for the equity you walk away with when you sell.
This calculator totals every dollar spent owning — down payment, mortgage payments, property tax, insurance and maintenance — then subtracts the equity at the end (appreciated value minus the remaining loan balance). For renting it totals rent with annual increases. The difference line is the honest answer: positive means renting was cheaper over that time, negative means owning won. Long holding periods favour buying because fixed-rate mortgage payments fall in real terms while rent keeps rising.
The formula
Monthly ownership cost = mortgage payment + property tax ÷ 12 + insurance ÷ 12 + maintenance ÷ 12. Net owning cost over N years:
down payment + monthly ownership × 12N − (home value − loan balance)
total rent = Σ rent × 12 × (1 + g)^y for y = 0…N−1The mortgage balance after N years comes from the amortisation formula; home value is compounded at the appreciation rate.
Worked example
On a 400,000 home with 20% down at 6.50%, owning costs about $2,872.62 a month in mortgage, tax, insurance and maintenance. Renting at 2,000 costs $2,000.00. After 10 years the net cost of owning is $158,431 against $275,133 of rent — owning is cheaper by $-116,702 in this scenario.
Common mistakes
- Ignoring maintenance. Budget 1% of the home's value a year for repairs and upkeep. A new roof or furnace can wipe out several years of rent savings.
- Using short horizons. Buying usually needs five or more years just to recover closing costs and transaction fees; moving sooner often favours renting.
- Assuming guaranteed appreciation. Home prices can be flat or fall. Try the calculator with 0% appreciation to see how much of the case depends on that assumption.
Frequently asked questions
Is it better to rent or buy?
It depends on how long you will stay, local prices versus rents, interest rates and what else you would do with the down payment. As a rule of thumb, staying fewer than five years usually favours renting; longer stays usually favour buying, even after maintenance.
How does renting compare if I invest the difference?
Renting usually costs less monthly, and investing that difference can close much of the gap over long periods. This calculator does not model investment returns on the saved money, so treat its result as the housing-only comparison.
What costs are not included?
Closing costs when buying (typically 2–5% of the price) and selling costs (agent commission around 5–6% in the US) are excluded. Including them would make short holding periods look even worse for buying.
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