Rent vs Buy Calculator

Compare the net cost of buying a home, after the equity you build, with the total cost of renting for as long as you plan to stay.

Compare the net cost of buying, after home equity, with the cost of renting over the same period.

Home price

Down payment

Mortgage interest rate

Mortgage term

years

Monthly rent

Years you plan to stay

years

Ownership costs (% of home value per year)

Property tax, homeowners insurance, and maintenance combined.

Yearly home value and rent growth

Applied to both the home value and your rent.

Closing and selling costs (% of price)

One-time costs to buy and later sell, such as lender fees and agent commissions.

Monthly mortgage payment

$2,275

Total cost of renting

$220,679

Net cost of buying

$158,155

Home equity at the end

$227,945

Buying minus renting

-$62,524

Results are estimates for informational purposes only.

Excludes PMI, tax effects, and the return the down payment could earn if invested instead.

How to use this calculator

How this comparison works

Renting and buying are hard to compare because much of a mortgage payment is not a pure cost. Part of each payment pays down the loan, and the home itself may be worth more when you sell. This calculator totals what you would spend in each case over the same period, then subtracts the equity you would own at the end.

For buying, it adds your down payment, every mortgage payment made while you stay, ongoing ownership costs (property tax, insurance, and maintenance, entered together as a yearly percentage of the home’s value), and one-time closing and selling costs. It then subtracts your home equity at the end: the projected home value minus the loan balance still owed. What remains is the net cost of buying. For renting, it adds up each month’s rent, raising it once a year by the growth rate.

A negative result in “Buying minus renting” means buying came out cheaper over the period; a positive result means renting did.

What tips the decision

How long you stay matters most. Closing and selling costs are paid only once, and early mortgage payments are mostly interest, so buying tends to lose over short stays and win over longer ones. With the default inputs, renting is cheaper for a 2-year stay, the two are roughly even at 3 years, and buying pulls ahead from 4 years on.

The price-to-rent ratio is a quick check: divide the home price by a year of rent. The defaults give $450,000 ÷ ($2,400 × 12) ≈ 15.6. Lower ratios tend to favor buying and ratios above about 20 tend to favor renting, though mortgage rates and local property taxes can shift those lines.

Home value growth works in buying’s favor because it adds directly to your equity. With 0% growth instead of 3%, the default 7-year comparison flips from buying saving about $62,500 to renting saving about $54,000.

What this comparison leaves out

The biggest omission is opportunity cost: the return your down payment and closing costs could earn if you invested them instead of putting them into a home. Over several years at a moderate return, that can amount to tens of thousands of dollars on the renting side.

Private mortgage insurance (usually required with less than 20% down on a conventional loan), the mortgage interest deduction (which only helps if you itemize), and renters insurance are also not included. If buying wins by only a small margin, treat the result as a tie and let flexibility and your plans decide.

You can also review Mortgage Calculator and Mortgage Affordability Calculator to compare scenarios.

Formula

Loan amount = home price − down payment; the monthly payment uses the standard amortization formula over the mortgage term
Total cost of renting = sum of monthly rent, raised each year by the growth rate
Home equity at the end = home price × (1 + growth)^years − remaining loan balance
Net cost of buying = down payment + mortgage payments + ownership costs + closing and selling costs − home equity at the end
Buying minus renting = net cost of buying − total cost of renting

Example: $450,000 home vs $2,400 rent for 7 years

Buying: $90,000 down and a $360,000 loan at 6.5% for 30 years, a payment of $2,275.44 a month.
Over 7 years you spend about $386,100: the $90,000 down payment, $191,137 in mortgage payments, $68,962 in ownership costs, and $36,000 in closing and selling costs.
After 3% yearly growth the home is worth about $553,443 and you still owe about $325,498, leaving $227,945 of equity. Net cost of buying: about $158,155.
Renting: $2,400 a month rising 3% a year totals about $220,679. Buying comes out about $62,524 cheaper over the 7 years.

Renting vs buying by length of stay

Default inputs: a $450,000 home with $90,000 down, a 6.5% 30-year mortgage, $2,400 rent, 2% yearly ownership costs, 3% yearly growth, and 8% closing and selling costs. A negative difference means buying costs less.

Years you plan to stay	Total cost of renting	Net cost of buying	Buying minus renting
2 years	$58,464	$73,159	$14,695
3 years	$89,018	$91,109	$2,091
4 years	$120,488	$108,609	-$11,879
5 years	$152,903	$125,635	-$27,268
7 years	$220,679	$158,155	-$62,524
10 years	$330,160	$202,660	-$127,500
15 years	$535,649	$263,098	-$272,551

Frequently asked questions

How long do I need to stay for buying to make sense?

It depends on prices, rent, and rates where you live, which is why the comparison period is adjustable. With the default inputs, buying breaks even at about 3 years. Many people use 5 years as a rule of thumb, since closing and selling costs take several years of equity growth to recover.

Why not just compare rent with the mortgage payment?

Because part of every mortgage payment reduces your loan balance, and you keep that money as equity when you sell. Comparing rent with the full payment overstates the cost of buying, while ignoring taxes, insurance, and maintenance understates it. This calculator counts all of them.

What should I enter for ownership costs?

Combine property tax, homeowners insurance, and maintenance as a percentage of the home’s value. Property tax averages around 1% of home value nationally but varies widely by state, and a common maintenance guideline is about 1% a year. A total of 2% to 3% is a reasonable range to test.

Is renting throwing money away?

No. Rent pays for housing with flexibility and without maintenance risk. Owners also pay costs that build no equity: interest, property tax, insurance, upkeep, and transaction costs. The better choice is the one with the lower net cost for the time you will stay, plus the flexibility you need.