Rent vs Buy Calculator
Should you rent or buy? This calculator compares the long-term financial impact of renting versus buying a home. It accounts for mortgage payments, property taxes, maintenance, home appreciation, rent increases, and the opportunity cost of your down payment invested elsewhere.
Whether to rent or buy is one of the most consequential financial decisions most adults make, and it's also one of the most misunderstood. The popular framing "renting is throwing money away" obscures the fact that buying has equally large costs that disappear into property taxes, insurance, maintenance, mortgage interest, and the opportunity cost of a down payment that could have been invested elsewhere.
This calculator runs an honest head-to-head: total cost of buying (mortgage payments, taxes, insurance, maintenance, minus equity built and appreciation gained) vs total cost of renting (rent payments, minus growth on the down payment invested at market returns). The answer depends heavily on how long you stay, local price-to-rent ratios, mortgage rates, and assumed appreciation.
There is no universal answer. In high-priced coastal metros with price-to-rent ratios above 25, renting often wins financially for periods under 7–10 years. In affordable Midwest cities with ratios below 15, buying usually wins within 3–5 years. The point of this calculator is to find your specific break-even.
Inputs
Percent of home value per year
Return on investing savings instead of buying
Results
Verdict
Renting is better
Net Difference
$14,608.09
Home Equity
$232,997.58
Investment Balance
$247,605.67
Net Worth: Buying vs Renting
Cumulative Costs
Yearly Breakdown
| Year | Rent Costs | Buy Costs | Home Equity | Investments |
|---|---|---|---|---|
| 1 | $21,600.00 | $100,737.49 | $83,629.63 | $84,551.77 |
| 2 | $43,848.00 | $131,705.97 | $97,783.86 | $99,722.34 |
| 3 | $66,763.44 | $162,912.39 | $112,486.17 | $115,543.44 |
| 4 | $90,366.34 | $194,363.87 | $127,761.28 | $132,048.72 |
| 5 | $114,677.33 | $226,067.77 | $143,635.19 | $149,273.84 |
| 6 | $139,717.65 | $258,031.67 | $160,135.28 | $167,256.65 |
| 7 | $165,509.18 | $290,263.36 | $177,290.37 | $186,037.30 |
| 8 | $192,074.46 | $322,770.87 | $195,130.83 | $205,658.39 |
| 9 | $219,436.69 | $355,562.49 | $213,688.66 | $226,165.17 |
| 10 | $247,619.79 | $388,646.73 | $232,997.58 | $247,605.67 |
Formula
How to use this calculator
- Enter the home price and down payment for the home you would buy.
- Enter mortgage rate, term, and property tax rate as you would for a normal mortgage estimate.
- Enter annual maintenance as a percentage of home value. The standard planning rule is 1% per year, but older homes and humid climates run higher.
- Enter expected home appreciation. Long-run U.S. average has been roughly 3–4% nominal; check Zillow or local data for your metro.
- Enter monthly rent for an equivalent property — same neighborhood and size, not a smaller place to save money.
- Enter expected annual rent increase. The U.S. long-run average is about 3%, but specific metros (Austin, Phoenix, Miami) have run much higher in recent years.
- Enter expected investment return on the alternative use of capital. 7% (after inflation) is a common stock-portfolio assumption.
- Try multiple time horizons. Buying often loses over 1–5 years (closing costs aren't amortized) and wins over 10–30 years.
Worked examples
Price-to-rent ratio 20
$350K home vs $1,800/mo rent. Price-to-rent ratio (price / annual rent) = 350,000 / 21,600 ≈ 16. Mortgage rate 6.5%, 30-year, 7% investment return. Break-even: ≈ year 5 (buying wins after this) At year 10: buying ≈ $25,000 ahead At year 30: buying ≈ $400,000 ahead A ratio in the mid-teens favors buying, especially with longer time horizons.
High-priced metro, short stay
$800K home vs $3,200/mo rent. Price-to-rent ≈ 21. Same rates. Break-even: ≈ year 8–10 At year 5: renting ≈ $40,000 ahead At year 15: buying ≈ $150,000 ahead If you might leave within 5 years, renting is the cheaper bet. Mobility has financial value the standard "throwing money away" framing ignores.
When to use this calculator
Use this calculator before house-hunting, not after. The "should I buy" question is dominated by two variables you control: how long you'll stay, and how aggressively you invest the alternative cash.
The classic rule of thumb — "buy if you'll be there 5+ years" — comes from typical closing/selling costs of 8–10% of home value amortized over the holding period. Below 5 years those costs eat any equity gain. Above 7–10 years, even unfavorable price-to-rent ratios usually flip toward buying.
Non-financial factors matter too: stability of income, freedom to move for opportunity, desire to renovate, school zoning, and tolerance for being a part-time property manager. The numbers tell you the financial part of the decision, not the whole decision.
Common mistakes to avoid
- Comparing a mortgage payment to current rent. The right comparison is buying total cost (PITI + maintenance + opportunity cost) vs renting total cost (rent + lost investment growth on down payment).
- Forgetting maintenance. 1% of home value per year is the planning rule; ignoring it makes buying look ~$3,500/yr cheaper than reality on a $350K home.
- Assuming home appreciation will match the recent past. 2020–2022 was historically anomalous. Use long-run averages (3–4%) for planning.
- Ignoring opportunity cost on the down payment. $70K invested at 7% for 30 years grows to ~$533,000. That's a real number renters earn.
- Comparing dissimilar properties. A 4-bed house you'd buy vs a 1-bed apartment you currently rent isn't apples-to-apples.
- Ignoring transaction costs. Buying and selling a home costs 8–12% of value total. Frequent moves destroy the math.
Frequently Asked Questions
Sources & further reading
- Buying a home — should I rent or buy? — U.S. Consumer Financial Protection Bureau
- Housing prices and rents — historical data — Federal Reserve Bank of St. Louis (FRED)