Buy vs. Rent Calculator
Enter your rent, a home price, and a comparison period to compare a more complete buy-versus-rent wealth model with year-by-year results.
How to use this buy vs rent calculator
- Enter monthly rent
Type your current or expected monthly rent payment.
- Set home purchase details
Enter the home price, down payment percentage, mortgage rate, and loan term.
- Add owner costs
Fill in property tax rate, insurance, maintenance, community dues, mortgage insurance, and buying and selling costs.
- Set growth assumptions
Enter expected home appreciation, rent growth, and investment return rates.
- Review the comparison
Check total costs, equity, investment value, and the break-even horizon to see which path builds more wealth over the chosen period.
How this buy vs rent calculator works
This calculator compares a longer-horizon buying-versus-renting decision using mortgage payments, appreciation, rent growth, and an investment alternative for the down payment and monthly savings from renting. It also includes recurring owner costs such as property tax, insurance, maintenance, community dues, mortgage insurance, and transaction costs at both purchase and sale, then shows how the buy and rent outcomes change year by year. That makes it much more useful for identifying when buying actually pulls ahead, not just which side wins in a single end-state snapshot.
Buy outcome = home equity − owner costs − buying costs − selling costs; Rent outcome = invested down payment and fee savings + monthly savings from renting − rent paid Renting at $2,000 per month versus buying a $400,000 home with 20 % down at 6.5 % over 10 years: the calculator compares total rent cost of $275,133.10, total buy cost of $322,714.12, home equity of $266,282.95, and the invested renter alternative at $157,886.90. The final advantage is $60,815.03, and the model shows whether buying breaks even within the comparison horizon.
Comparing a $2,000 rent with a $400,000 home over 5 years instead of 10 dramatically shifts the result toward renting, because buying's heavy upfront and exit costs have less time to be offset by appreciation and equity build-up. Short holding periods often favor renting even when the monthly mortgage payment is similar to rent.
Raising the assumed home appreciation from 3 % to 5 % while keeping all other inputs the same pushes the buy outcome well ahead of renting over 10 years. Appreciation is one of the most sensitive assumptions in this model — a small change in expected growth can flip the verdict entirely.
- ✓ Uses a fixed-rate mortgage for the entire modeled period.
- ✓ Property tax, maintenance, and selling costs are estimated with simple percentages rather than market-specific tax rules or exact transaction quotes.
- ✓ Rent is assumed to increase at a steady annual rate.
- ✓ Investment returns are modeled as a constant average, so volatility and sequence-of-returns risk are not reflected.
- A short time horizon usually favors renting because buying has heavy upfront and exit costs that need time to amortize.
- Maintenance, taxes, insurance, community dues, and mortgage insurance materially change the answer in many markets, so leaving them out can make buying look better than it really is.
- The year-by-year comparison is often more useful than the final verdict because many households move before the nominal break-even year is reached.
- This is still a planning model — tax deductions, renovations, lifestyle flexibility, and neighborhood risk can all change the real-world choice.
What drives the buy vs rent decision?
The buy-versus-rent decision is not simply a comparison of monthly payments. It involves two fundamentally different wealth-building paths. When you buy, your monthly payment builds equity in an appreciating asset, but you also take on maintenance, insurance, taxes, and transaction costs that renters avoid. When you rent, your housing cost is simpler and more predictable, and the money you would have spent on a down payment and owner costs can be invested elsewhere. The financial outcome depends on how these two paths compound over time. Key variables include home appreciation, investment returns on the renter's alternative portfolio, the length of time you stay, and the full spectrum of owner costs beyond the mortgage itself. In most scenarios, buying becomes more attractive the longer you plan to stay, because the fixed costs of buying and selling are amortized over a longer period. For shorter horizons, renting often wins because those transaction costs dominate the comparison.
The role of opportunity cost
Opportunity cost is the hidden factor that many buy-versus-rent comparisons overlook. When you buy a home, the down payment and closing costs are tied up in the property rather than invested in a diversified portfolio. If the stock market or other investments return more than your home appreciates (after accounting for all owner costs), then buying may underperform renting on a pure wealth basis. Conversely, if home values rise quickly and the mortgage acts as leverage on the appreciation, buying can dramatically outperform. The monthly savings difference also matters: if renting is cheaper month to month, the difference can be invested, and those contributions compound over the comparison period. This calculator models that alternative investment path so you can see the total wealth outcome for both scenarios rather than just the monthly cost. The result is highly sensitive to the investment-return and appreciation assumptions you choose, so running the comparison at multiple rates gives a more complete picture.
Frequently asked questions
Does this include property taxes and insurance?
Yes. You can enter property tax, insurance, maintenance, community dues, mortgage insurance, and both buying and selling costs so the comparison is closer to an all-in ownership model.
What return rate should I use for investments?
A common long-run planning assumption is around 5–7% nominal for a diversified portfolio. Use a lower number if you want a more conservative renting scenario.
Why is the break-even horizon important?
Because buying often looks favorable only after several years. If you expect to move before the break-even year, renting may still be the better financial choice even when buying wins over a very long horizon.