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Rent vs. Buy Calculator

See which option costs less over time — buying a home or renting and investing the difference — based on the assumptions you provide about rates, growth, and how long you'll stay.

Calculator

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$
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years
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Common rule of thumb is 1% of home value per year
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%/yr
Agent commission plus closing costs — commonly 6-10%
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$
%/yr
Used for the cash you'd invest instead of a down payment
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years

How It Works

The net cost of buying adds up your upfront cash (down payment plus closing costs) and every monthly housing cost over the period, then subtracts what you'd net from selling the home at the end — its projected value minus your remaining loan balance minus estimated selling costs.

The net cost of renting adds up total rent paid, then subtracts the investment growth you'd get from investing the upfront cash you didn't spend on a down payment and closing costs, at the return rate you provide.

Whichever number is lower is the cheaper option under your assumptions — but the assumptions (appreciation, rent growth, investment return) are estimates you control, not predictions this calculator makes for you.

Not included: This is a simplified model: it doesn't include mortgage interest tax deductions, PMI, moving costs beyond an estimated selling-cost percentage, or the possibility that rates and growth assumptions change over the period.

Formula

NetCost(buy) = Upfront + ΣMonthlyCosts − (HomeValue − LoanBalance − SellingCosts); NetCost(rent) = ΣRent − OpportunityGain
  • Upfront — Down payment + closing costs
  • ΣMonthlyCosts — Total P&I, tax, insurance, and maintenance paid over the period
  • OpportunityGain — Growth on the upfront cash if invested instead, at your assumed return rate

Example

Example inputs: $400,000 home, $80,000 down, 6.5% rate, 30-year term, $2,200/mo comparable rent, 7-year stay, 3% appreciation, 6% investment return.

Result: Net cost of buying: $169,502.97. Net cost of renting: $157,969.54. Renting is cheaper by $11,533.43 under these assumptions.

Frequently Asked Questions

What if I change the appreciation or investment return rate?

Try it — this comparison is sensitive to both. Higher home appreciation favors buying; a higher achievable investment return on the cash you'd otherwise put down favors renting.

Does this include the mortgage interest tax deduction?

No. Whether itemizing and deducting mortgage interest helps you depends on your tax situation, so it isn't included here to avoid a false sense of precision.

Why does buying show 'equity' separately from the cost comparison?

The net cost of buying already accounts for equity (it's subtracted as part of your sale proceeds). The equity row is shown separately just so you can see the raw number.

This calculator provides estimates for informational purposes only and should not be considered financial, tax, or legal advice.