Rent vs Buy Calculator

1. Enter the home price, your down payment percentage and the mortgage rate.
2. Enter how many years you plan to stay and the monthly rent for a similar home.
3. Adjust the growth rates for rent and home prices, your yearly ownership costs and the return your cash could earn.
4. Read which option is cheaper, both net costs and the break-even year.

Here is what each result means:

A rent versus buy comparison asks a simple question with a complicated answer: over the time I will live somewhere, is it cheaper to own or to rent? Comparing a mortgage payment with a rent cheque is misleading, because owning brings large one-off costs, ongoing upkeep and tax, and a valuable asset at the end, while renting keeps your cash free to invest.

A fair comparison therefore looks at the net cost of each path. For buying, that is every dollar spent minus the equity you recover when you sell. For renting, it is the rent itself. The answer depends most on how long you stay, because buying and selling costs are heavy up front and only get spread thin over many years.

This tool assumes you can already afford the home. To check that first, use the home affordability calculator.

It builds a full cost ledger for each option over your stay and subtracts one from the other.

The mortgage payment is M = L i / (1 - (1+i)^-360) on a 30-year loan, and the balance still owed after k months is L(1+i)^k - M((1+i)^k - 1)/i. Adding the balance and subtracting the sale value means only the interest and costs, not the equity you build, count against buying.

1. Add the down payment and closing costs of 3 percent of the price.
2. Add every mortgage payment and each year of ownership costs, growing with the home value.
3. Add the loan balance you still owe and selling costs of 6 percent of the future value, then subtract that future value.
4. Add the return your down payment and closing costs would have earned if invested.
5. Sum the rising rent for renting, compare, and repeat for every year to find break-even.

Take a 400,000 home with 20 percent down at 6.5 percent. The mortgage payment is about 2,023 a month. A similar home rents for 2,200, rising 3 percent a year. Home prices also grow 3 percent, ownership costs run 2 percent of the price and cash could earn 5 percent.

Over 7 years, renting costs about 202,289. The net cost of buying, after the home is sold for about 491,950 and the loan is repaid, is about 187,552. Buying saves roughly 14,737.

Shorten the stay to 3 years and the picture flips. Closing and selling costs have little time to be absorbed, so renting saves about 20,113. With these inputs the break-even year is year 6, so the decision rests almost entirely on how long you expect to stay.

Many people compare only rent with the mortgage payment. The real cost of each path has more moving parts.

To see the breakdown of a mortgage payment alone, the mortgage calculator shows principal and interest in detail.

Length of Stay

The single biggest factor. Buying and selling costs of around 9 percent of the price need several years of equity growth to recover.

Price-to-rent Ratio

Where homes are expensive relative to rents, renting tends to win for longer. Where rents are high relative to prices, buying pays off sooner.

Home Price Growth

Faster appreciation raises the value you walk away with and shortens break-even. Flat or falling prices can make renting cheaper for a decade or more.

Mortgage Rate

Higher rates increase the interest share of every payment, pushing break-even further out.

Investment Returns

If your cash could earn a strong return elsewhere, tying it up in a down payment costs more.

Rent Growth

Rising rents make renting more expensive over time, while a fixed mortgage payment stays flat.

Before House Hunting

Decide whether buying makes sense at all for your expected time in an area.

When Relocating

A move for a job of uncertain length is a classic case where renting may be the safer, cheaper choice.

Comparing a Specific Home with a Specific Rental

Plug in real numbers for two options you are weighing.

Testing Assumptions

Try a lower appreciation rate or higher rate to see how fragile the case for buying is.

1. Comparing Rent with the Mortgage Payment Only

This ignores tax, insurance, maintenance, closing and selling costs, and the equity you keep.

2. Calling All Mortgage Payments Wasted or All Saved

Principal builds equity; interest does not. The model counts only what you do not get back.

3. Ignoring Opportunity Cost

A down payment invested elsewhere would grow. That lost growth is a real cost of owning.

4. Assuming Prices Always Rise Quickly

Using an optimistic appreciation rate makes buying look far better than it may turn out.

5. Underestimating Maintenance

A common rule of thumb is 1 to 2 percent of the home value a year, more for older homes.

The model captures the main economics, but it simplifies tax and transaction details that vary by country and state.

It depends mostly on how long you stay. Buying usually wins over longer stays once closing and selling costs are absorbed, while renting often wins for stays of only a few years.

It is the first year in which the net cost of buying drops below the total cost of renting. If you plan to stay longer than that, buying is likely cheaper.

Buying carries closing costs of around 3 percent and selling costs near 6 percent. Over a short stay there is too little equity growth to recover them.

Property tax, homeowners insurance, maintenance and any HOA fees. Together they often run 1.5 to 3 percent of the home value a year.

Money used for a down payment could otherwise be invested. The return it gives up is a genuine cost of buying, known as opportunity cost.

No more than mortgage interest, property tax and maintenance are. Both paths have unrecoverable costs; the calculator compares those, not the headline payments.

A 30-year fixed-rate mortgage, the most common term. Selling before the end means the remaining balance is repaid from the sale.

No. Mortgage interest and property tax deductions depend on your country and tax situation, so they are left out for simplicity.

No. The calculation runs in your browser, and nothing you enter is sent anywhere unless you Save a result, which stays on this device only.

• Buying a house (Consumer Financial Protection Bureau).
• Rent or buy (Investopedia).
• Amortization calculation (Wikipedia).