Rent vs. Buy Calculator

Compare the costs of renting versus buying a home to make an informed decision

Renting Details

Monthly Rent

Annual Rent Increase (%)

Renters Insurance (Monthly)

Security Deposit

Buying Details

Home Price

Down Payment

Interest Rate (%)

Loan Term (Years) 10 Years 15 Years 20 Years 30 Years

Annual Property Tax (%)

Annual Home Insurance (%)

Annual Home Appreciation (%)

Annual Maintenance Costs

Closing Costs

Selling Costs (%)

Comparison Period

Time Period (Years)

Alternative Investment Return (%)

Rent vs. Buy Comparison

Total Renting Cost

$0.00

Total cost of renting over the period

Total Buying Cost

$0.00

Total cost of buying over the period

Net Difference

$0.00

Which option is more cost effective

Cost Comparison Over Time

Detailed Breakdown

Year	Rent Cost	Buy Cost	Difference	Home Equity

This calculator provides estimates only. Actual costs may vary. Print Results

A Rent vs. Buy Calculator helps you compare the long-term costs of renting a home versus purchasing one, factoring in mortgage payments, equity growth, maintenance, taxes, and opportunity costs.

Key Inputs

1. Home Price

2. Down Payment (%)

3. Mortgage Interest Rate

4. Loan Term (Years)

5. Property Taxes & Insurance

6. Maintenance Costs

7. Rent Amount

8. Rent Increase Rate (%)

9. Investment Return (Opportunity Cost)

10. Time Horizon (Years)

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How It Works

Buying Costs

1. Upfront Costs

   • Down payment

   • Closing costs (~2–5% of home price)

2. Recurring Costs

   • Mortgage payments (principal + interest)

   • Property taxes

   • Home insurance

   • Maintenance (~1–2% of home value/year)

3. Opportunity Cost

   • What if you invested the down payment instead?

Renting Costs

1. Monthly Rent

2. Rent Increases (typically 2–3%/year)

3. Opportunity Cost

   • What if you invested the savings from renting (e.g., no down payment, lower monthly costs)?

Net Cost Comparison

$$\text{Net Cost of Buying}=\text{Total Buying Costs}-\text{Home Equity Gained}$$$$\text{Net Cost of Renting}=\text{Total Rent Paid}-\text{Investment Gains from Savings}$$

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Example Calculation

Scenario	Buying	Renting
Home Price	$400,000	N/A
Down Payment (20%)	$80,000	$0
Mortgage Rate	5%	N/A
Monthly Rent	N/A	$2,000
Time Horizon	10 years	10 years
Investment Return	7% (opportunity cost)	7% (saved cash invested)

Results After 10 Years:

• Buying:

  • Total costs ≈ $300,000 (mortgage, taxes, maintenance)

  • Home equity ≈ $200,000

  • Net cost ≈ $100,000

• Renting:

  • Total rent paid ≈ $265,000 (with 3% annual increases)

  • Investment gains (from $80K down payment + monthly savings) ≈ $180,000

  • Net cost ≈ $85,000

Conclusion: Renting is $15,000 cheaper in this scenario.

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When Buying Wins

✅ Long-Term Stay (5+ years) → Builds equity.
✅ Low Mortgage Rates (<4%) → Cheaper than rent.
✅ Home Value Rises (Appreciation > inflation).

When Renting Wins

✅ Short-Term Stay (<5 years) → Avoids transaction costs.
✅ High Mortgage Rates (>6%) → Renting may be cheaper.
✅ Better Investment Returns (If savings outperform home appreciation).

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Non-Financial Factors

• Flexibility → Renting allows easy moves.

• Maintenance Responsibility → Owners handle repairs.

• Stability → Owning avoids rent hikes.

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Try It Yourself

Rule of Thumb:

• If Price-to-Rent Ratio > 20, renting is usually better.

  $$\text{Price-to-Rent Ratio}=\frac{\text{Home Price}}{\text{Annual Rent}}$$

  • Example: $400,000 home ÷ ($2,000 rent × 12) = 16.7 → Borderline case.