Rent vs Buy Calculator

The rent vs. buy decision is one of the largest financial choices most people make. This calculator compares the true total cost of each option, counting the parts of homeownership that never appear on the mortgage statement: maintenance, the agent’s commission on the way out, and what the down payment would have earned somewhere else.

It leads with the monthly figure, itemised, because that is the number you have to live with every month and the one a lender will test you against. It takes your own property tax rate, your HOA fee and a 15 or 30 year term, and it works out the break-even year for you rather than asking you to pick one. If instead you already know how long you plan to stay and want to argue with the assumptions, the advanced rent vs buy calculator puts the appreciation rate and the investment return in your hands and draws the two cost curves crossing.

Monthly cost of buying:

Monthly Mortgage (P&I) = P × [r(1+r)^n] / [(1+r)^n − 1]

Where P = loan amount, r = monthly interest rate, n = number of payments (months)

Additional monthly homeownership costs:

Monthly cost of renting:

• Monthly rent
• Renter’s insurance: typically $15–30/month
• No maintenance costs (landlord’s responsibility)

5-year total cost of buying:

Total = (Monthly PITI) × 60 + Transaction costs in − Equity built + Opportunity cost of down payment

Transaction costs, the drag nobody budgets for:

• Purchase costs: ~3–5% of purchase price (closing costs, inspection, title)
• Selling costs: 5–6% commission + ~1% closing costs on exit
• Total roundtrip: 8–11% of home value just in transaction friction

The break-even timeline: The rule of thumb everyone repeats is 5-7 years, and it came out of a era when mortgages were near 3%. At 6.5% it usually is not true any more. Run the numbers on a $400,000 house with 20% down and the crossover lands closer to ten years, because the interest alone eats most of what the appreciation earns.

The calculator below charges you for the round trip: purchase closing costs going in, agent commission and closing costs coming out, and the investment return the down payment would have made if it had never left the brokerage account. Those three lines are what push the break-even from year one out to somewhere realistic. A calculator that skips them will tell you buying wins almost immediately, which is how a lot of people end up selling at a loss after eighteen months.

Key variables that shift the calculation:

• Rent-to-price ratio: Annual rent / home price. Above 5% favors renting; below 3% strongly favors buying
• Mortgage rate: Each 1% increase in rate adds roughly 10% to the monthly payment on a 30-year loan
• Home appreciation rate: 4-5% a year nationally in nominal terms over the long run, which is only 1-2% after inflation. This calculator uses 4%.
• Investment return on down payment: If invested instead, a down payment earning 7%/year is a real opportunity cost of buying
• How long you plan to stay: The single biggest factor. Short stays almost always favor renting.

Assumptions used below: 4% annual home appreciation, 3% annual rent growth, 7% annual investment return, 0.4% insurance and 1% maintenance on the home’s value each year. Property tax, HOA and the transaction percentages are yours to set.

This page is about housing. If you landed here wanting to know whether to keep a car or hire one on the days you need it, that is the rent vs own car calculator. It is a different shape of question, decided on days a month rather than years in the home.