How to use the rent vs buy calculator
- 1 Enter the home price, down payment, mortgage rate and loan term.
- 2 Enter property tax, insurance, maintenance and any HOA fees.
- 3 Enter the rent for a similar home, how fast rent and home prices grow, and the return on investments.
- 4 Enter the years you plan to stay and read which choice leaves you better off.
Worked example
A $400,000 home with 20% down at 6.5% for 30 years, versus $2,200 rent, over 7 years. Owning costs $2,873 in the first month (a $2,023 mortgage payment plus tax, insurance and maintenance). After 7 years, the home is worth about $491,950 and the buyer's equity after selling costs is $173,101. The renter, who invested $92,000 up front and the monthly difference at 6%, has $195,470, so renting leaves about $22,370 more over this period.
Deciding whether to buy
- Plan to stay at least five years before buying.
- Compare the price-to-rent ratio in your area.
- Count every owning cost, not just the mortgage.
- Test several home price growth rates.
Check the price you can afford with the Home Affordability Calculator, your rent budget with the Rent Affordability Calculator, and the cash needed with the Down Payment Calculator.
Features
All the costs
Mortgage, tax, insurance, maintenance, HOA and 3% closing costs.
Fair comparison
The renter invests the down payment and any monthly savings.
Break-even year
Shows when buying pulls ahead, after 6% selling costs.
When to use it
First-time buyers
See whether now is the time to buy. Check the price you can afford with the Home Affordability Calculator.
Moving soon
Short stays usually favor renting. Check your rent budget with the Rent Affordability Calculator.
Planning a down payment
See how much you need with the Down Payment Calculator.
Comparing loan payments
Check the monthly payment in the Mortgage Calculator.
Related Home and Auto tasks
Frequently asked questions
Is it better to rent or buy?
It depends mostly on how long you stay, the price-to-rent ratio in your area, mortgage rates and how fast prices rise. Buying usually wins over long periods; renting often wins if you move within five years.
What is the break-even point?
The number of years after which buying leaves you with more net worth than renting and investing. Selling costs and closing costs mean buying rarely wins in the first few years.
Why does the renter invest money?
To compare fairly. A buyer turns the down payment and monthly payments into home equity; a renter who keeps that money can invest it. Ignoring this makes buying look better than it is.
What costs of owning do people forget?
Property tax, insurance, maintenance (often 1% to 2% of the value a year), HOA fees, closing costs of 2% to 5% when buying and 5% to 6% when selling.
What is the price-to-rent ratio?
The home price divided by a year's rent. Above about 20, renting is often cheaper; below about 15, buying often makes more sense.
Does the mortgage interest deduction change the result?
For most people, no. With the 2026 standard deduction of $16,100 single and $32,200 joint, fewer than one in ten households itemize, so the deduction often saves nothing.
What return should I use for investments?
A cautious long-term return, for example 5% to 7% for a stock-heavy portfolio, or lower if the renter would keep the money in savings.
Does home price growth matter a lot?
Yes. It is often the biggest factor. Try 2%, 3% and 4% to see how sensitive your result is.
Is rent money thrown away?
No more than mortgage interest, property tax and maintenance are. Both renters and owners pay for housing; the question is which costs less overall.
Does this include taxes on investment gains?
No. It uses the return you enter. In a taxable account, the renter's real return would be a little lower.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Built and reviewed by Hamza Farooq, founder and lead developer
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