Rent vs Buy Calculator

Use our Rent vs Buy Calculator to compare the full, long-term cost of renting versus owning a home. The goal isn’t to “win” a debate-it’s to make a resilient decision that holds up when life changes or markets swing. Below you’ll find a step-by-step framework for reading the results, stress-testing assumptions, and deciding whether you should rent or buy based on your time horizon, local prices, mortgage rate, property taxes, maintenance, HOA dues, expected appreciation, rent inflation, and the opportunity cost of investing your cash instead of tying it up in a down payment.

How to read your results

Focus first on the green results banner: it tells you which option is cheaper over your selected horizon and by how much. The comparison is net of equity for buyers and net of the future value of invested cash for renters. If the difference is small, prioritize non-financial factors-flexibility, location options, school choices, space needs, and your appetite for maintenance surprises.

The chart shows the average monthly cost at each possible move-out year. Look for the breakeven point-the year where the “Buy” curve dips below “Rent.” Early years often favor renting because closing costs and potential selling costs haven’t had time to spread out. Longer horizons tend to favor buying because principal paydown and modest home appreciation build equity while rent continues to rise.

What costs are included?

On the buy side we include: down payment, buyer closing costs, monthly principal and interest (amortized), property taxes, homeowners insurance, HOA dues, maintenance (as a percent of home value), selling costs at the end, and the equity you keep after paying off the remaining loan. Taxes and maintenance scale with the appreciated value of the home; insurance and HOA are treated as level for simplicity.

On the rent side we include: all rent payments with annual rent growth, renter’s insurance, and the future value of the cash you did not spend on a down payment or buyer closing costs (your opportunity cost). This credit is a big reason short horizons frequently lean toward renting.

When buying tends to win

• Time horizon ≥ 5–7 years. Closing and selling costs are spread over more years.
• Stable or rising market. Even modest appreciation (2–3%/yr) adds up, especially with leverage.
• Rent inflation is persistent. Fast rent growth pushes the rent curve higher each year.
• Fixed payments fit your budget. A predictable mortgage can be easier to plan around than variable rent.

When renting tends to win

• Short horizon (≤ 4 years). Transaction costs dominate; renting avoids them.
• High maintenance/tax burden. Older homes, large lots, or high-tax areas tilt the math.
• Better returns elsewhere. If you can earn strong, reliable returns on invested cash, renting can be efficient.
• You need flexibility. Career moves, new family needs, or uncertain plans favor a lease.

Essential pre-buy checklist

If your results say buying is cheaper, make sure the decision fits your broader financial plan:

• Emergency fund: 3–6 months of expenses after your down payment and closing costs.
• DTI & pre-approval: Verify your debt-to-income ratio and lock a realistic rate quote.
• Inspection & reserves: Budget for near-term repairs (roof, HVAC, plumbing, foundation).
• All-in monthly: Compare mortgage P&I + tax + insurance + HOA + maintenance with comfort, not just maximum approval.
• Exit plan: Understand selling costs, local liquidity, and the rentability of the property if you need to move.

How to stress-test your assumptions

Decisions are stronger when they survive “what-ifs.” Slide the inputs ±10–20% and confirm the outcome. Ask: What if appreciation is 0%? What if maintenance runs 1.5–2% of value? What if rent growth slows? What if your investment return is lower? If the decision stays the same under several scenarios, it’s likely robust.

Advanced questions people ask

PMI and low down payments. If you put less than 20% down, add private mortgage insurance to the monthly cost until you reach 20% equity; the calculator’s maintenance/tax/HOA fields already capture most ongoing costs, but PMI can be material-check your lender quote.

ARMs vs fixed rates. Adjustable-rate mortgages can reduce early payments but add interest-rate risk. If you expect to move before an ARM adjusts, it can narrow the rent vs buy gap; otherwise, model the worst-case adjustment.

Points and refinancing. Buying points lowers your rate up front, but only pays off if you stay long enough. If you plan to refinance, remember there are new closing costs-update the model accordingly.

Taxes and itemizing. We keep the comparison conservative by not assuming mortgage interest or property tax deductions. If you itemize, your after-tax homeowner cost may be a bit lower than shown.

Lifestyle matters as much as math

Housing is shelter first, investment second. Buying can unlock renovations, pets, and long-term neighborhood roots; renting delivers flexibility, simpler maintenance, and access to locations where buying would stretch your budget. If the calculator shows a small cost difference, let these qualitative factors lead the choice.

Example frameworks to decide

Short-term professional: If you might relocate within three years and the banner shows a small advantage for buying, default to renting unless you have a credible plan to house-hack or keep the property as a rental.

Growing family: If schools, space, and stability are top priorities and the model shows buying becomes cheaper around year six, consider purchasing sooner and keeping a healthy reserve for maintenance surprises.

Investor mindset: If your down payment could earn reliably elsewhere, use the rent growth and investment return fields to compare outcomes directly-sometimes renting and investing wins even when appreciation is solid.

Frequently misunderstood points

• “Rent is 100% wasted”-and so are interest, taxes, insurance, HOA, and selling costs on the buy side. Equity is the difference.
• “Real estate always appreciates.” It doesn’t. Local cycles exist; use conservative assumptions and stress-test.
• “My rate is all that matters.” Rate is one lever. Taxes, maintenance, and time horizon can move the result just as much.

Methodology summary

We simulate loan amortization monthly, scale property taxes and maintenance with home value, hold insurance and HOA flat, apply selling costs at exit, and net out homeowner equity. For renting, we escalate rent, add renter’s insurance, and credit the future value of the down payment and buyer closing costs invested at your chosen return. The output is a net total cost for each path and an average monthly cost by stay length to help you see the breakeven year. Treat results as planning estimates-not advice specific to your tax situation or market.

Bottom line

The best decision is the one that still makes sense when the assumptions move around. Use this Rent vs Buy Calculator to anchor the math, then layer on your values: how much flexibility you need, how much risk you want to carry, and where you’ll be happiest living day to day. If you can say “I’d make the same call if appreciation were 1% lower and maintenance 1% higher,” you’re in high-confidence territory.