Rent vs buy calculator
In a rent vs buy comparison, buying usually wins only if you stay long enough. On a $400,000 home with 20% down at 6.5% and 3% appreciation, versus renting for $2,400 a month and investing the difference at 5%, buying comes out ahead after year 6. At 10 years, the buyer is about $47,000 better off.
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Estimate only, not financial advice. The result depends on assumptions about appreciation, rent growth and investment returns that nobody can predict. Tax deductions are not included.
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📌 Key facts
- Buying usually wins only if you stay long enough: closing costs plus roughly 6% to sell weigh on short stays.
- On a $400,000 home with 20% down at 6.5% and 3% appreciation, versus $2,400 rent with the difference invested at 5%, buying comes out ahead after year 6.
- At 10 years in that example, the buyer is about $47,000 better off.
- The comparison counts principal, interest, property tax, insurance, maintenance and HOA dues for the buyer.
- Changing appreciation by one point can swing the result a lot.
How the comparison works
The calculator follows two households month by month. Both start with the same cash.
- The buyer puts down the down payment and closing costs, then pays principal and interest, property tax, insurance, maintenance and HOA dues. The home grows in value. At the end, net worth = home value − loan balance − selling costs.
- The renter invests the down payment and closing costs, pays rent, and invests each month whatever the buyer would have spent above the rent. Net worth = the investment account.
buyer net worth = home value − loan balance − value × selling cost % renter net worth = initial cash and monthly differences, compounded at the investment return
Why time horizon matters most
Buying carries heavy upfront and exit costs (closing costs plus roughly 6% to sell), and early payments are mostly interest. That is why short stays usually favor renting. Using the default example ($400,000 home, 3% appreciation, $2,400 rent):
| You stay | Buyer | Renter | Better |
|---|---|---|---|
| 3 years | $102,330 | $122,062 | Renting |
| 7 years | $173,101 | $160,353 | Buying |
| 10 years | $234,029 | $186,777 | Buying |
What the model leaves out
Mortgage interest and property tax deductions, capital gains exclusions and the value of living where you choose are not modeled, and neither are repairs larger than the maintenance allowance. Changing appreciation by one point can flip the answer, so test several scenarios.
Rent vs buy calculator: what each side pays
The buyer and the renter spend money in different ways. The buyer pays a down payment, closing costs, mortgage interest, property tax, insurance and maintenance. The renter pays rent and renter's insurance, then invests the rest. So the question is not who pays less each month. It is who ends up with more wealth.
For example, on a $400,000 home with 20% down, the buyer puts $80,000 down. The renter invests that same $80,000 at 5%. Over time, home equity grows with each payment and with appreciation.
Rent vs buy calculator: rules of thumb that help
A few rules help frame the choice. However, none replaces your own numbers.
- Stay at least five to seven years if you plan to buy.
- Keep housing costs at or below about 28% of gross income.
- Keep an emergency fund after the down payment.
- Compare the price-to-rent ratio in your area.
In fact, the right answer depends on your city. In some markets renting wins for a decade. In others buying wins in four years.
Rent vs buy calculator: related tools
To go deeper, check each piece. First, estimate your budget with the home affordability calculator. Then find your payment in the mortgage calculator. Next, add cash due with the closing cost calculator.
If you want income from property, try the cap rate calculator. Finally, test a future refinance with the refinance calculator.
Rent vs buy calculator: how to read the results
The rent vs buy calculator reports net worth for each side over time. If the buyer's line crosses above the renter's line, that is the break-even year. Before that year, renting leaves you with more wealth. After it, buying wins. So a rent vs buy result is really a timeline.
For example, in the default case buying pulls ahead after year 6. Try a lower rent, a higher rate or lower appreciation, and watch that date move. Each rent vs buy test teaches you which assumptions drive the answer.
3 real-life examples
Default case, 10 years
$400,000 home, $80,000 down, 6.5%, 30 years, 1% tax, $1,800 insurance, 1% maintenance, 3% appreciation versus $2,400 rent rising 3% a year and 5% investment return. After 10 years: home value $537,567, loan balance $271,284, buyer net worth $234,029, renter $186,777. Buying wins by $47,252 and overtakes renting in year 6.
Weak appreciation, 5 years
Same home with only 1% yearly appreciation and a 5-year stay: buyer net worth $95,625 versus $139,318 for the renter. Renting wins by $43,693 and buying never catches up in that window.
$300,000 home, $2,000 rent, 15 years
$60,000 down at 6%, 1.2% tax, $1,500 insurance, 3% appreciation, rent rising 3%. After 15 years the buyer holds $268,830 versus $103,320 for the renter, and buying pulls ahead in year 4.