Finance
Rent vs Buy Calculator
Should you rent or buy? Compare total costs over time - mortgage, taxes, appreciation, and opportunity cost - to find your break-even.
Guide
How to use the Rent vs Buy Calculator
The Rent vs Buy Calculator helps you make a quick estimate, compare scenarios, and understand the numbers behind the result. It is designed for fast planning, with enough context to make the answer useful instead of just a number.
- Enter the amounts, rates, and time period that match the scenario you want to model.
- Review the main result first, then scan the supporting totals to understand what drives it.
- Change one input at a time to compare payments, interest, growth, savings, or break-even points.
Method
How this calculator works
It compares the projected net cost of buying with the projected cost of renting and investing the difference.
This calculator is useful for estimating the break-even point between renting and buying.
Because assumptions matter, try a few values that represent optimistic, typical, and conservative cases.
Financial results are estimates. Actual loan terms, taxes, fees, rates, and market returns can change the final outcome.
Example
Worked example
Consider a $400,000 home bought with 20% down at 6.8% versus renting a similar place for $2,200 a month. The full ownership cost — about $2,086 in principal and interest, plus roughly $1,000 in taxes, insurance, and maintenance — is around $3,100 a month, well above the rent. Buying still catches up over time through principal paydown and appreciation, but only after several years; the calculator pins down that break-even year for your own numbers.
FAQ
Common questions
Is renting just throwing money away?
No. Rent buys housing the same way mortgage interest, property tax, insurance, and maintenance do — none of those build equity either. Buying wins when appreciation plus principal paydown outpace those costs and what your down payment could have earned invested elsewhere.
How long do I need to stay for buying to beat renting?
Commonly around five or more years. Buying and later selling costs roughly 8%–10% of the home's value in transaction fees, so short stays rarely recover them. The break-even point this calculator finds depends heavily on your local rent-to-price ratio and appreciation assumptions.
What do people forget when comparing renting and buying?
Maintenance (often estimated at 1% of home value per year), the opportunity cost of the down payment, and transaction costs at sale. Including them frequently moves the break-even by years compared to a naive rent-versus-mortgage-payment comparison.
What information do I need for the Rent vs Buy?
You usually need home price, rent, mortgage terms, taxes, insurance, maintenance, appreciation, and investment return. You can change the inputs and recalculate as many times as needed.
How does the Rent vs Buy calculate the result?
It compares the projected net cost of buying with the projected cost of renting and investing the difference.
Are the results exact?
Financial results are estimates. Actual loan terms, taxes, fees, rates, and market returns can change the final outcome.
Related
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Sources