How to use this rent vs buy calculator
- How long you plan to stay — often the biggest factor, because buying has large one-off costs that take time to recover.
- Buying — the price, down payment, mortgage rate and term, running costs (property tax, insurance, maintenance, HOA fees), the closing costs to buy, the costs of selling, and how fast you expect prices to grow.
- Renting — the rent for a similar home, how fast it rises, renters insurance, and the return the renter could earn by investing.
The answer at the top is the difference in net cost at the end of your stay. Each chart column shows the gap at the end of one year, colored by which option is ahead. Hover over or tap a column for both net costs, or open the table under the calculator.
How the comparison works
The calculator follows a buyer and a renter month by month. Whenever buying costs more than renting in a month, the renter invests the difference, so renting doesn’t look cheaper just because less money went out. Each side then gets a net cost: what it paid out, minus what it has to show for it at the end.
The renter starts by investing the down payment and closing costs the buyer spent upfront, and the investment gains are the final balance minus everything the renter put in. Some details:
- The mortgage payment is fixed. Property tax and maintenance are charged on the home’s current value, so they rise as the home does.
- The home’s value and the investments grow monthly, at rates that add up to your yearly figures.
- Rent rises once a year. Insurance and HOA fees stay at the amounts you enter.
- The break-even year is the first year-end at which buying has the lower net cost, checked over 30 years.
Worked example
The default inputs compare a $350,000 home with 20% down ($70,000) against renting a similar home for $2,000 a month, over an 8-year stay. The mortgage is $280,000 over 30 years at an illustrative 6.4%, so the payment is $1,751.42. Property tax is 1.1% a year, insurance $1,500 a year, maintenance 1% a year, closing costs 3% ($10,500) and selling costs 6%. Prices and rent both grow 3% a year, renters insurance is $15 a month, and investments earn an illustrative 5% a year.
In the first month, owning costs $2,488.92: $1,751.42 of principal and interest, $320.83 of property tax, $125.00 of insurance and $291.67 of maintenance. Renting costs $2,015.00, so the renter invests the $473.92 difference. After 8 years, the two sides look like this:
| Buying, over 8 years | Amount |
|---|---|
| Down payment | $70,000 |
| Closing costs | $10,500 |
| Mortgage payments (of which $135,891 is interest) | $168,136 |
| Property tax | $34,704 |
| Home insurance | $12,000 |
| Maintenance | $31,549 |
| Less: equity when you sell ($443,370 value − $247,755 loan − $26,602 selling costs) | −$169,013 |
| Net cost of buying | $157,876 |
| Renting, over 8 years | Amount |
|---|---|
| Rent | $213,416 |
| Renters insurance | $1,440 |
| Less: investment gains ($112,032 invested grows to $158,772) | −$46,740 |
| Net cost of renting | $168,116 |
Over 8 years, buying is cheaper by $10,240. The $112,032 the renter invests is the $80,500 the buyer spent upfront plus $31,532 of monthly differences. Year by year:
| Year | Buying: net cost | Renting: net cost | Cheaper option |
|---|---|---|---|
| 1 | $48,408 | $20,024 | Renting by $28,384 |
| 3 | $81,360 | $60,798 | Renting by $20,562 |
| 5 | $113,047 | $102,696 | Renting by $10,351 |
| 6 | $128,370 | $124,131 | Renting by $4,239 |
| 7 | $143,321 | $145,927 | Buying by $2,606 |
| 8 | $157,876 | $168,116 | Buying by $10,240 |
| 10 | $185,708 | $213,803 | Buying by $28,095 |
Buying starts far behind, because the closing costs, and the selling costs of an early sale, are lost straight away. It catches up as you repay the loan and the home gains value. The break-even year here is year 7.
What changes the answer
Each row below changes one input from the example and keeps the 8-year stay:
| Change | Break-even year | Over 8 years |
|---|---|---|
| None (the example) | 7 | Buying by $10,240 |
| Prices grow 2% a year | 12 | Renting by $18,108 |
| Prices grow 4% a year | 5 | Buying by $40,665 |
| Investments earn 7% | 12 | Renting by $13,037 |
| Investments earn 3% | 5 | Buying by $30,755 |
| Rent of $2,300 a month | 4 | Buying by $48,644 |
| Selling costs of 8% | 8 | Buying by $1,373 |
Nobody knows future price growth or investment returns, so try a pessimistic and an optimistic case. If buying only wins under the optimistic one, the decision is closer than it looks. Cost isn’t everything, either: renting is flexible, while owning gives you control over your home.
What this calculator does not include
- Taxes: mortgage interest deductions, tax on the sale of a home, and tax on the renter’s investment gains are all left out. The rules differ by country and by household.
- PMI: if you put down less than 20%, add your expected PMI to the HOA field as a rough stand-in. See how to get rid of PMI.
- Months when renting costs more: if rent rises above the owner’s costs, the buyer is not credited with investing the difference, which favors renting over long stays.
- Rate changes, refinancing, renovations, moving costs and rising insurance or HOA fees.
For a longer explanation of every cost on both sides, read our guide to rent vs buy. To check whether the price fits your income, use the home affordability calculator.
Frequently asked questions
Why does the renter get investment gains?
Money spent on a down payment and closing costs can’t also be invested. Counting what it would have earned (the opportunity cost) makes the comparison fair, because the renter’s money would not sit idle.
What does a negative net cost mean?
That you end up with more than you put in. It can happen for a buyer when the home grows in value quickly over a long stay. The comparison still works the same way: the option with the lower figure is cheaper.
What should I enter for maintenance?
A common rule of thumb is about 1% of the home’s value a year, and more for an older home. If you know the property, list the repairs it is likely to need, such as a new roof or furnace, and spread their cost over your stay.
Can I save my calculation?
Members can save any calculation and reopen it later from their account. The calculator itself is free for everyone, with instant results and no sign-up. See membership.
Results are estimates for educational purposes and are not financial advice. See our disclaimer.