Rent vs buy calculator.

A rent vs buy comparison tracks your net worth under each path for the years you would stay. On a $400,000 home with 20% down, a 6.5% rate, $2,200 rent, 3% price growth, and a 5% return on invested savings, renting ends $9,832.72 ahead after 7 years. Buying pulls ahead after 8 years and 7 months. Every input is an assumption you can change.

Updated Reviewer (financial): to be assignedTyped values never leave your browser

Buy a home or rent and invest

Both paths start with the same cash. The renter invests it and any monthly savings. The buyer owns the home, minus selling costs and the loan balance.

Tab next field Ctrl K search for another tool
Renting comes out aheadcalterix
$9,832.72
After 7 years: buying leaves you $173,100.59, renting leaves you $182,933.31. Buying pulls ahead after 8 years and 7 months.
  • Home value after 7 years$491,949.55
  • Selling costs-$29,516.97
  • Loan balance left-$289,331.98
  • Buyer net worth (includes any side savings)$173,100.59
  • Renter net worth (invested savings)$182,933.31
  • Down payment and closing costs at the start$92,000.00
  • Loan amount$320,000.00
  • Renting ahead by$9,832.72
This is a simulation built on assumptions that you choose, not a forecast or advice. Home prices, rents, and investment returns can differ a lot from the values entered. Taxes and other personal factors are not modeled.

How the comparison works

Buying and renting both cost money, and both can build wealth. The calculator follows a month-by-month path for each so you can compare the end result.

  • Buying: you put down cash up front (down payment and closing costs), then pay the mortgage, property tax, and upkeep each month. At the end, you sell. Net worth is the home value, minus selling costs, minus the loan balance.
  • Renting: you invest the same up-front cash, pay rent, and invest any month where renting costs less than owning. If renting costs more in a month, the buyer invests the difference instead.
Buyer net worth = home value × (1 − selling cost) − loan balance + side savings
Renter net worth = invested up-front cash + invested monthly savings, with growth
Home value = price × (1 + growth)^years
Both paths grow invested money at the same return you enter.

For the loan itself, see the mortgage calculator and the amortization schedule. To see how invested money compounds, use the investment growth calculator.

A worked example

StayBuyer minus renter
3 years-$27,999.83
5 years-$20,121.71
7 years-$9,832.72
10 years+$10,943.20
15 years+$63,597.51
20 years+$146,550.92
$400,000 home, 20% down, 6.5%, 30 years, 1% property tax, 1.5% upkeep and insurance, 3% growth, 3% closing, 6% selling, $2,200 rent rising 3% a year, 5% return. Negative means renting ahead.

The longer the stay, the more the loan balance falls and the price grows, while up-front and selling costs get spread over more years. In this example, buying pulls ahead after 8 years and 7 months.

Break-even rent

StayBreak-even rent today
5 years$2,480.25
7 years$2,290.41
10 years$2,137.42
15 years$2,001.06
Same assumptions as above. Rent above the figure favors buying for that stay.

A shorter stay needs a higher rent to justify buying, because closing and selling costs hit hard when spread over few years. The break-even rent shows how much your rent has to beat to make owning worthwhile.

The assumptions that decide it

  • Time you stay. Buying usually needs several years to cover closing and selling costs.
  • Home price growth. Prices can rise or fall. A 3% growth is an assumption, not a forecast. Try 0% and 5% to see the range.
  • Investment return. A higher return makes renting and investing look better. A cautious number is safer.
  • Property tax, insurance, and upkeep. They vary by home and location. Enter your own estimates.
  • Rent increases. Rent that rises faster than 3% favors buying.
Not modeled: income tax effects (such as deductions), mortgage insurance, moving costs, or the value you place on stability, space, or flexibility. The numbers are one input to the decision, not the whole decision.

Common mistakes in rent vs buy math

  • Comparing the mortgage payment with rent and stopping there. Tax, insurance, upkeep, and selling costs belong in the comparison.
  • Counting home price growth as certain. It is an assumption that can be wrong.
  • Forgetting that the down payment could have been invested.
  • Ignoring how long you will really stay. A move in two or three years changes the answer.

Frequently asked questions

Is it better to rent or buy a house?

It depends on how long you stay, prices, rates, and rent. On the example numbers, renting comes out $9,832.72 ahead after 7 years, and buying pulls ahead after 8 years and 7 months. Enter your own inputs to check.

How long do I need to stay in a house for buying to make sense?

Buying has up-front and selling costs, so the answer is usually several years. Use the Compare tab to see the break-even point for your numbers. In the example, it is 8 years and 7 months.

How do I calculate the break-even point between renting and buying?

Track net worth under each path each month and find the first month buying stays ahead. The calculator does this for you and shows the result in the explanation line.

What rent makes buying worth it?

Use the Break-even rent tab. In the example with a 7-year stay, buying wins if rent today is above $2,290.41 a month.

Does this calculator include the mortgage interest deduction?

No. Taxes are not modeled, because they depend on your situation. Talk to a tax professional about how owning affects your taxes.

What growth rate should I use for home prices?

No one can know. The 3% in the example is an assumption. Try a lower number and a higher number to see how much the answer moves.

Sources and review

  • Standard amortization formula
  • Compound growth at a constant assumed return
PHOTO
Reviewer (financial): to be assignedQualified professional, signing off on every update.