Finance
Rent vs Buy Calculator
Buying beats renting only once equity and appreciation outweigh the down payment, closing and selling costs: net cost = cash in − what you get back. Enter a price, a rent and how long you'll stay to see which is cheaper and your break-even year.
The home you would buy
$
%
%
yr
Owning costs
%
$
%
$
%
%
%
Renting instead
$
%
$
%
How long you would stay
yrs
Over 7 years
Renting saves $7,904
Buy $165,119 vs rent $157,215, net cost
Net cost to buy
$165,119
Net cost to rent
$157,215
Monthly to own (yr 1)
$2,872.62
Monthly rent (yr 1)
$2,200.00
Sale value
$491,950
Net sale proceeds
$168,181
Renting wins here
Over 7 years, renting and investing the down payment costs about $7,904 less — a short stay or high buying costs favour renting.
Estimate only. Results swing on appreciation, rent growth and investment return — all uncertain. Ownership costs are held flat; taxes, insurance and maintenance drift in reality.
Try a scenario
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The basics
What decides rent vs buy?
The monthly payment is a distraction. The real answer turns on how long you stay and what your cash could earn elsewhere.
time is the pivot
Buying is a long game
A purchase carries big one-time costs — down payment, closing, and selling costs later. They only pay off if you own long enough for equity and appreciation to overtake them.
Break-even here is about 8 years
the road not taken
Renting frees up cash
A renter can invest the money a buyer sinks into the down payment. A fair comparison credits that investment gain to renting — which is why a low mortgage rate alone does not settle it.
The invested down payment earns ~$46,334 here
Method
How the comparison is built
Four steps put both choices on the same net-cost footing.
- 1
Total the cost of buying
Add the down payment, closing costs, and every ownership cost over the years you stay — mortgage, tax, insurance, maintenance, HOA.
$80,000 down + $12,000 closing + $241,300 costs - 2
Subtract what the sale returns
At the end, subtract the net sale proceeds: the home's grown value, minus selling costs, minus the remaining loan balance.
− $168,181 proceeds = $165,119 net - 3
Total the cost of renting
Add all the rent (growing each year) and renters insurance over the same period.
$202,289 rent + $1,260 insurance - 4
Credit the invested down payment, then compare
Subtract the investment gain a renter earns on the down payment. Whichever net cost is lower is the cheaper choice.
− $46,334 gain = $157,215 net
Worked examples
The same home, different stays
The $400,000 scenario at each holding period. Buying goes from a loss to a win as the years add up.
| Stay | Net cost to buy | Net cost to rent | Cheaper by |
|---|---|---|---|
| 3 years | $97,455 | $64,566 | rent $32,889 |
| 5 years | $132,662 | $109,944 | rent $22,718 |
| 7 years | $165,119 | $157,215 | rent $7,904 |
| 10 years | $208,061 | $231,688 | buy $23,628 |
| 15 years | $261,697 | $365,228 | buy $103,531 |
Where it shows up
Decisions it settles
Three real questions this comparison answers.
new job, new city
A likely short stay
If a move might come within a few years, the transaction costs of buying rarely have time to pay off. The calculator shows the break-even before you commit.
Under ~5 years often favours renting
hot vs flat market
Testing appreciation
The answer is sensitive to home appreciation and rent growth. Running an optimistic and a pessimistic case shows how much the guess matters.
High appreciation tilts toward buying
invest the difference
The renter's counterplay
Renting only wins if you actually invest the freed-up cash. The tool makes that assumption explicit so you can hold yourself to it.
Down payment invested at your return
Reference
Rules of thumb, and their limits
Quick screens are handy, but none replace running your own numbers above.
| Rule | Says | The catch |
|---|---|---|
| The 5-year rule | Buy only if staying ~5+ years | Depends on costs and appreciation, not a fixed line |
| Price-to-rent ratio | Under 15 buy, over 21 rent | Ignores your return, taxes and how long you stay |
| The 1% maintenance rule | Budget ~1% of price a year | Old or large homes can cost far more |
| Selling costs 6–8% | It costs money to sell | Wipes out gains on a short hold |
Worth knowing
Six things the headline misses
The comparison is only as honest as its assumptions.
selling costs bite
Exiting is expensive
Agent commission and closing costs of 6–8% of the sale price come off the top when you sell — the main reason short stays favour renting.
maintenance is real
Homes cost to keep
Roofs, HVAC and repairs add up. Budgeting around 1% of the home's value a year keeps the ownership cost realistic.
rent never stops rising
Rent compounds against you
A fixed mortgage payment stays put while rent climbs with inflation — an advantage of buying that grows the longer you stay.
invest, don't spend
The renter must invest
Renting only wins if the down payment is actually invested. Spent instead, the comparison collapses in buying's favour.
appreciation is a guess
Nobody knows future prices
Home appreciation is the biggest swing factor and the least knowable. Test more than one rate.
beyond the numbers
Some value is not financial
Stability, freedom to renovate, or the flexibility to move quickly are real benefits money math cannot capture.
Quick chart
Is it worth buying if I stay N years?
For the $400,000 default scenario, the net advantage of buying at each holding period. Negative means renting is cheaper.
| Years in the home | Buying advantage | Verdict |
|---|---|---|
| 2 | −$36,314 | Rent |
| 3 | −$32,889 | Rent |
| 4 | −$28,367 | Rent |
| 5 | −$22,718 | Rent |
| 7 | −$7,904 | Rent |
| 10 | +$23,628 | Buy |
| 15 | +$103,531 | Buy |
Break-even for this scenario: about 8 years. Change the inputs above to match your own market.
How we calculate this
The method and our assumptions
Both paths are reduced to a single net cost over your holding period.
buy = cash in − sale proceeds
Cost of buying
Down payment, closing costs and all ownership costs paid over the period, minus the net proceeds of the sale (grown home value − selling costs − remaining loan balance).
rent = rent paid − investment gain
Cost of renting
All rent (growing each year) and renters insurance, minus the gain a renter earns by investing the down payment and buying closing costs at your chosen return.
- Ownership costs (tax, insurance, maintenance, HOA) are held flat; in reality they drift upward.
- Rent grows once a year at the rate you set; the mortgage payment is fixed.
- Home appreciation and investment return are steady annual rates — both are uncertain.
- The comparison ignores income-tax effects such as any mortgage-interest deduction.
Sources
Where the method comes from
- Consumer Financial Protection Bureau — the costs of buying and owning a home.
- Standard rent-vs-buy net-cost framework, including opportunity cost of the down payment.
- Standard amortization formula for the mortgage and remaining-balance schedule.
FAQ
Common questions
It depends mostly on how long you stay. Buying has large one-time costs — a down payment, closing costs and, later, selling costs — that only pay off if you own long enough for appreciation and equity to outweigh them. In the $400,000 example, buying pulls ahead of renting after about 8 years; below that, renting and investing the down payment costs less.
It compares the net cost of each path over the years you plan to stay. Buying = down payment + closing costs + all ownership costs (mortgage, tax, insurance, maintenance, HOA) minus the net proceeds when you sell. Renting = all rent (growing each year) plus renters insurance, minus the investment gain a renter earns on the money a buyer would have sunk into the down payment. The lower net cost wins.
It is the number of years of ownership at which buying becomes cheaper than renting. Before it, the upfront and selling costs dominate; after it, equity and appreciation win. For the default scenario the break-even is about 8 years. A common rule of thumb is that buying rarely pays off if you will move within about five years.
Because a renter does not tie that cash up in a house — they can invest it. To compare fairly, the calculator grows the down payment and buying closing costs at your investment return and credits that gain to the rent side. In the example, that invested cash earns about $46,334 over 7 years, which offsets a big chunk of the rent paid.
The ones beyond the mortgage: property tax, homeowners insurance, and maintenance (often budgeted at about 1% of the home's value a year), plus HOA dues, and the 6–8% selling costs when you eventually move. These extras are why the true cost of owning is well above the monthly payment — and why a low mortgage rate alone does not settle the question.
Not automatically. Buying builds equity and can benefit from appreciation, but transaction costs, maintenance and interest eat into that — especially over a short stay. If home prices are flat or you sell quickly, renting and investing the difference can leave you better off. The outcome hinges on appreciation, how long you stay, and what your alternative investment earns.
Divide a home's price by a year of rent for a comparable place. Under about 15 tends to favour buying; over about 21 tends to favour renting; in between, it depends. On the example, $400,000 ÷ ($2,200 × 12) is about 15. It is a quick screen, not a substitute for running your own numbers.
A lot — they are the most uncertain inputs and the ones the answer is most sensitive to. Higher home appreciation favours buying; faster rent growth favours buying too (rent keeps rising while a fixed mortgage does not). Because both are guesses about the future, test a pessimistic and an optimistic case rather than trusting a single number.
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Ugo CharlesBuilt and fact-checked against our editorial standards · Last updated June 2026
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