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Rent vs. Buy Comparison Tool

Compare the net cost of renting vs buying over time.

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Results

Cheaper Option
Net Cost Buying$132,799.29
Total Cost Renting$229,873.87

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Assumptions

  • Buying assumes a 20% down payment, a 30-year mortgage, and simplified maintenance and property-tax rates.
  • Rent grows at a fixed annual rate and buying costs include a simplified selling-cost estimate.
  • This is a directional financial comparison, not a full personal housing model.

Sensitivity preview

Home Price -10%: Cheaper Option Buying

Home Price Current: Cheaper Option Buying

Home Price +10%: Cheaper Option Buying

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About this Rent vs. Buy

Buying a home builds equity, but it comes with high upfront costs and maintenance. Renting offers flexibility but no return on investment. This tool runs a financial simulation to see which option leaves you wealthier after a set number of years.

Who this calculator is for

  • Renters trying to decide whether homeownership is financially worth it in their market.
  • Buyers comparing flexibility against equity and long-term stability.
  • Anyone weighing a move with a defined time horizon, especially under seven years.

When to use it

  • Use this calculator when you are choosing between renewing a lease and buying a home.
  • Compare short-term and long-term staying horizons to see when buying starts to make sense.
  • Pair it with affordability and mortgage tools when you want to test whether a target home also fits your budget.

How to use this calculator

  1. Enter the target Home Price and estimated Monthly Rent for a comparable property.
  2. Set your Time Horizon (how long you plan to stay).
  3. Adjust assumptions like Appreciation and Mortgage Rate.

Key assumptions

  • Buying assumes a 20% down payment, a 30-year mortgage, and simplified maintenance and property-tax rates.
  • Rent grows at a fixed annual rate and buying costs include a simplified selling-cost estimate.
  • This is a directional financial comparison, not a full personal housing model.

Accuracy and testing

Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.

View accuracy page

How this calculator works

The calculator sums up all unrecoverable costs for both scenarios: Buying Costs: Mortgage Interest + Property Tax + Maintenance + Buying/Selling Fees - Appreciation Gains. Renting Costs: Total Rent Paid (adjusted for annual increases) - Investment Gains from saving the down payment difference.

Inputs explained

Time Horizon

How many years you plan to live in the home. Buying usually requires 5-7 years to break even due to closing costs.

Home Appreciation

The expected annual increase in the home's value (Historically 3-4%).

Maintenance

Included in the calculation at 1% of home value per year.

Understanding your results

The calculator outputs the Net Cost of each path. The option with the lower net cost is financially superior.

Example scenarios

Short Term (3 Years)

Buying usually loses due to high closing costs (buying/selling fees). Renting is often cheaper.

Long Term (10 Years)

Buying usually wins as fixed mortgage payments stay stable while rent increases, and equity builds up.

Key Features

  • Includes Maintenance Costs
  • Accounts for Rent Inflation
  • Equity Calculation
  • Selling Fee (6%) Inclusion

Things to Keep in Mind

Assumes standard deduction for taxes (does not calculate mortgage interest deduction benefits, which vary by individual).

Tips & Best Practices

  • Don't ignore the 'Opportunity Cost'. The money tied up in a down payment could be earning 7-10% in the stock market if you rented instead.
  • Buying locks in your housing payment (mostly), shielding you from rent inflation.

Glossary of Terms

Equity
The portion of the property that you actually own (Value - Mortgage Balance).
Appreciation
Increase in asset value over time.
Unrecoverable Costs
Money spent that you never get back (Rent, Interest, Taxes, Repairs).

Frequently Asked Questions

Is buying always better than renting?
No. In expensive markets where the Price-to-Rent ratio is high, renting and investing the difference can sometimes build more wealth than buying.
What is the 5-year rule?
A general rule of thumb that if you don't plan to stay in a home for at least 5 years, the transaction costs of buying and selling will likely wipe out any profit.