Rent vs Buy Calculator
This rent vs buy calculator compares the real net cost of buying a home against renting an equivalent one, over however many years you plan to stay — accounting for the equity you'd build, not just the monthly payment difference. Enter your numbers to see which comes out ahead over your time horizon.
The purchase price you're considering.
As a percentage of the home price.
The rate on your home loan.
Length of the mortgage.
What renting an equivalent home would cost you today.
Property tax, insurance and maintenance combined, as a percentage of home value per year.
One-time costs to purchase, as a percentage of home price.
Expected yearly growth in home value.
Expected yearly increase in rent.
How many years you plan to stay, to compare over.
Buying advantage over renting
$69,195
Positive means buying works out cheaper over the comparison period; negative means renting does.
How to use this rent vs buy calculator
- 1Home price, down payment, mortgage rate and term: the basics of the purchase you're considering.
- 2Comparable monthly rent: what an equivalent home would cost to rent today.
- 3Annual owner costs: property tax, insurance and maintenance combined — 1-3% of home value per year is a common range.
- 4Comparison period: how long you realistically expect to stay — this matters more than almost any other input, since buying costs are front-loaded (closing costs) and renting costs are steady.
Understanding your results
Buying advantage over renting is the bottom line: positive means buying wins over your comparison period, negative means renting does. It's calculated as total rent paid minus the net cost of owning (all the cash you'd spend on the home, minus the equity you'd walk away with if you sold at the end of the period).
The formula
Buying advantage = Total rent paid − (Down payment + Closing costs + Mortgage + Owner costs − Home equity at end)The net cost of owning adds up every dollar spent on the home — down payment, closing costs, mortgage payments, and ongoing owner costs — then subtracts the equity you'd have if you sold at the end (home value at that point minus the remaining mortgage balance). This is what makes owning look better the longer you stay: closing costs get spread over more years, and more of your mortgage payment has gone toward principal rather than interest.
A worked example
A $350,000 home with 20% down ($70,000), a 6.5% 30-year mortgage, versus $1,900/month rent, held for 7 years: buying costs roughly $70,000 (down payment) + $10,500 (closing costs) + mortgage payments + owner costs, but builds home equity from both appreciation and principal paid down. Renting simply costs the growing rent total with no equity at the end. Whether buying wins depends heavily on how long you stay — a 2-year comparison usually favors renting due to upfront closing costs; a 10-year comparison usually favors buying.
Notes for the UK, US and India
This model deliberately simplifies two things: it doesn't account for the investment return you could earn by investing the money that would've gone to a down payment (an 'opportunity cost' some rent-vs-buy models include), and it doesn't include selling costs (typically 6-10% of sale price) when you eventually sell. Both would shift the comparison somewhat toward renting — treat this as a solid first-pass estimate, not a final answer.
Frequently asked questions
Why does the comparison period matter so much?+
Buying has large upfront costs (down payment, closing costs) that only pay off over time as you build equity. Stay a short time and those costs dominate; stay long enough and the equity built usually outweighs them. There's typically a 'break-even' point somewhere in between.
Does this include the opportunity cost of the down payment?+
No — this model doesn't assume you'd otherwise invest the down payment and earn a return on it. Including that would generally make renting look relatively more attractive, especially over shorter comparison periods.
Does this include selling costs when I eventually sell the home?+
No — real estate agent commissions and other selling costs (often 6-10% of sale price) aren't included in the home equity figure. Factor these in yourself if you're close to the break-even point either way.
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