Rent vs Buy Calculator
Compare the long-run cost of renting versus buying a home over a chosen number of years. Includes mortgage interest, property tax, maintenance, and investment opportunity cost.
What this calculates
Whether renting or buying is cheaper depends on how long you stay, your interest rate, what rent and home prices do, and what you'd earn investing the down payment instead. This calculator runs the math out over your chosen time horizon and shows the total cost of each path, plus the break-even year where buying becomes cheaper than renting.
Formula & how it works
Buying cost includes mortgage interest (not principal — that builds equity), property tax (~1.1 % of value/year), maintenance (~1 %), insurance, and closing costs. Renting cost is annual rent grown by an inflation factor. The opportunity cost of the down payment is what it would have earned in the market (~5–7 % real). After N years, comparing the equity built (home value − loan balance) against the invested down-payment + saved monthly differences tells you which came out ahead.
Worked example
$400K home, 20 % down, 6.5 % mortgage, 30-year term. $2,400/mo rent. Hold 7 years. Buying spends ~$185K on interest + tax + maintenance but builds ~$70K equity (price stable). Net buying cost ≈ $115K. Renting at 3 % rent growth = $221K over 7 years, but $80K invested at 6 % grows to ~$120K → net rent cost ≈ $101K. In this case renting wins by ~$14K. Adding home appreciation tips it the other way.
Frequently asked questions
How long do I need to stay for buying to win?
Rule of thumb: 5–7 years. Below that, transaction costs (typically 8–10 % of price round-trip) usually swamp any equity gains. Above 10 years, buying almost always wins in normal markets.
What's the biggest variable?
Home appreciation. Long-term US real appreciation is ~1 %/year (Robert Shiller data), but specific markets can move ±5 % per year for decades. If you're betting on appreciation, you're betting on the market.
Should I include the mortgage interest tax deduction?
In the US, only if you itemize — which is rarer after the 2017 standard deduction increase. Most middle-income buyers take the standard deduction and get no tax benefit from mortgage interest.
What about the emotional value of owning?
This calculator can't price freedom to paint a wall, certainty of housing costs, or pride of ownership. Many people pay a real premium for those, and that's a valid choice — just don't pretend it's a financial decision.
Disclaimer: Informational only — not financial advice.