Rent vs. Buy Calculator

What this estimate assumes

• This compares net worth — home equity if you buy vs. invested savings if you rent — at the end of the horizon you enter, not forever; a longer or shorter horizon can change which option wins.
• It assumes that if you rent, you invest your would-be down payment and any amount by which owning costs more per month than renting, at the return rate you specify.
• It doesn't account for selling costs (agent commissions, closing costs) when you eventually sell the home, or tax benefits like the mortgage interest deduction.

How to use this calculator

1. Enter the purchase price you're considering in Home price ($).
2. Enter how much you'd put down as a percentage of that price in Down payment (%).
3. Enter the mortgage rate you'd expect to qualify for in Mortgage rate (APR %), and the length of the loan in Loan term (years).
4. Enter Annual property tax (% of price) and Annual insurance & maintenance (% of price) — rough local averages work fine if you don't have exact numbers yet.
5. Enter how fast you expect the home's value to grow in Home price appreciation (%/year).
6. Enter what you'd pay to rent an equivalent place today in Starting monthly rent ($), and how fast you expect rent to climb in Annual rent increase (%).
7. Enter the return you'd realistically expect on money you invest instead of spending it on a down payment, in Investment return if renting (%/year).
8. Enter how long you actually plan to stay in Years you plan to stay — this is the single input that matters most, since buying's advantage usually grows the longer you stay.
9. Click Compare renting vs. buying to see which path leaves you with more net worth at the end of that horizon.

Worked example

Start with the calculator's own defaults: a $400,000 home, 20% down, a 6.5% 30-year mortgage, 1.1% property tax, 1.5% insurance & maintenance, 3% home appreciation, $2,200/month starting rent growing 3%/year, a 6% investment return if renting, and a 7-year horizon.

Down payment and loan: 20% of $400,000 is $80,000 down, leaving a $320,000 loan.

Monthly payment: At 6.5% APR, the monthly rate is 6.5/100/12 ≈ 0.0054167. Over 360 months, (1+r)^360 ≈ 6.9918, giving an amortization factor of r(1+r)^n / ((1+r)^n − 1) ≈ 0.0063207 per dollar borrowed. Multiply that by $320,000 and the monthly principal & interest payment works out to roughly $2,022.62/month.

Balance after 7 years: 84 months into a 360-month loan, you're barely a fifth of the way through, so most of the balance is still outstanding. With (1+r)^84 ≈ 1.57424, the standard remaining-balance formula puts the balance still owed at roughly $289,332.

Home value and equity: At 3%/year appreciation, $400,000 grows to 400,000 × 1.03^7 ≈ $491,950 after 7 years. Subtract the $289,332 still owed, and equity comes to roughly $202,618.

Cash paid while owning: Property tax (1.1%) plus insurance & maintenance (1.5%) add up to 2.6% of price per year — $10,400/year, or $72,800 over 7 years. Principal & interest over 84 months is about 2,022.62 × 84 ≈ $169,900. Add the $80,000 down payment, and total cash paid while owning comes to roughly $322,700.

Rent paid: Starting at $2,200/month ($26,400 in year one) and growing 3%/year for 7 years, total rent paid over that stretch adds up to roughly $202,289.

What a renter could invest: Owning costs about $2,022.62 (P&I) plus roughly $866.67/month in tax and maintenance (10,400 ÷ 12) — about $2,889.28/month total — versus $2,200 in rent. That's a $689.28/month gap a renter could invest instead.

Growing the renter's nest egg: Investing the $80,000 down payment at 6%/year for 84 months grows to roughly $121,630. Investing the $689.28/month gap for the same 84 months at 6%/year adds about $71,737 more. Together, the renter's invested nest egg comes to roughly $193,366.

Conclusion: Buying leaves you with about $202,618 in home equity, versus roughly $193,366 for renting and investing the difference — so in this default scenario, buying comes out ahead by roughly $9,251 after 7 years. It's a fairly close call, though, and small changes to the appreciation rate or the investment return assumption are enough to flip which side wins — which is exactly why it's worth running your own numbers instead of trusting a rule of thumb.

Frequently asked questions

Why does this calculator compare net worth instead of just comparing a mortgage payment to rent?

Monthly payment alone is misleading because buying builds equity while renting doesn't — but renting frees up cash (the down payment, and any monthly amount owning costs more than renting) that could be invested instead. Comparing net worth at the end of your horizon — home equity vs. an invested nest egg — captures both sides of that trade-off in one number.

What exactly does "investing the difference" mean here?

It assumes that if you rent, you invest the amount you would have otherwise put down on the home, plus any amount by which owning costs more per month than renting, at the return rate you enter. If renting is actually more expensive per month than owning in your scenario, this calculator doesn't model borrowing to invest — it treats that monthly gap as zero instead.

Does this include the cost of selling a home when I eventually move?

No. Selling a home typically costs 6–10% of the sale price in agent commissions, closing costs, and repairs, which would reduce the "buy" side of this comparison. If you know you'll sell at the end of your horizon, subtract a rough estimate of selling costs from the equity figure this calculator shows.

Does it account for the mortgage interest tax deduction?

No. The mortgage interest and property tax deductions can lower a buyer's effective cost, but how much depends on your tax bracket, whether you itemize, and current tax law, so this calculator leaves that out to keep the comparison general. If those deductions matter to you, they'd tilt the result somewhat further toward buying.

What if I only plan to stay a year or two?

The shorter your horizon, the more buying's upfront costs and the small amount of equity built so far tend to tip the comparison toward renting. Set "Years you plan to stay" to your real expected timeline — the math changes a lot between a 2-year stay and a 10-year one.

How much does the investment return assumption matter?

A lot — it's one of the most sensitive inputs. A renter's invested nest egg compounds over your full horizon, so just a couple of percentage points of difference in "Investment return if renting" can swing which side comes out ahead, especially over longer horizons.