Rent vs Buy Calculator
Compare the estimated long-term cost of renting versus buying a home using mortgage, rent, ownership cost, appreciation, and investment assumptions.
Rent vs Buy Results
This calculator is an estimate only. Actual rent-versus-buy results can change because of mortgage terms, taxes, insurance, repairs, appreciation, rent growth, investment returns, moving costs, tax deductions, closing costs, and local market conditions.
Use this Rent vs Buy Calculator to compare the estimated long-term financial cost of renting with buying a home. The calculation considers mortgage costs, rent, home equity, property expenses, transaction costs, home appreciation, and an optional investment return for renters.
Important: The result is a financial estimate, not a prediction of future home prices, rent, investment returns, or mortgage costs. Test several realistic scenarios before making a housing decision.
Rent vs Buy Calculation Method
For buying, first calculate the down payment and mortgage amount:
Down payment = home price × down payment percentage
Loan amount = home price − down payment
The monthly principal-and-interest mortgage payment is estimated using:
Payment = P × r × (1 + r)n ÷ [(1 + r)n − 1]
Where:
- P = mortgage principal
- r = monthly mortgage interest rate
- n = total number of monthly payments
The calculator also estimates future home value:
Future home value = home price × (1 + appreciation rate)years
Estimated home equity is:
Home equity = future home value − remaining mortgage balance
The buying side also includes entered costs such as property tax, homeowners insurance, maintenance, HOA fees, purchase closing costs, and selling costs.
For renting, monthly rent is accumulated over the comparison period and increased using the entered annual rent-growth assumption. If an investment return is entered, the calculator also estimates potential gains from money available to invest instead of using it for homeownership.
The calculator compares the estimated net cost of each option and identifies the lower-cost result under the assumptions entered.
Example
Suppose a home costs $300,000 with a 20% down payment, a 6% mortgage rate, and a 30-year mortgage.
Down payment = $300,000 × 20% = $60,000
Mortgage amount = $300,000 − $60,000 = $240,000
The estimated monthly principal-and-interest payment is approximately:
$1,438.92 per month
If the home appreciates by 3% annually for five years:
Future value = $300,000 × 1.035 ≈ $347,782
The calculator then compares the mortgage and ownership costs with rent paid over the same five-year period, while also considering remaining mortgage balance, estimated equity, transaction costs, and any renter investment assumption.
Important Notes
- Use realistic local estimates for home price, rent, mortgage rate, property tax, insurance, HOA fees, maintenance, and transaction costs.
- Home appreciation and future rent increases are assumptions and can differ substantially from actual market conditions.
- Investment returns entered for the renting scenario are not guaranteed.
- A mortgage payment alone does not represent the full cost of homeownership.
- Repairs, renovations, moving costs, utilities, mortgage insurance, lender fees, renter insurance, and other expenses may not be fully represented unless included in your assumptions.
- Personal tax deductions or credits are not calculated.
- A short ownership period can be significantly affected by buying and selling transaction costs.
- The financially cheaper option is not necessarily the best personal choice; flexibility, location, housing stability, and maintenance responsibility also matter.