Rent vs Buy Calculator

Please enter a price, rate and rent greater than 0, a down payment under 100%, and 1 to 30 years.
–net cost of buying
–net cost of renting
–difference (rent minus buy)
–break-even year

Simplified model: closing costs 3% of price, selling costs 6% of sale price. Ownership costs cover property tax, insurance and upkeep. It does not include tax benefits. Not financial advice.

How to use this calculator

Enter the home price, down payment, mortgage rate and your current or expected rent. Set how long you plan to stay and adjust the growth assumptions if you want. Press Compare to see the net cost of buying and renting over that time and the year when buying starts to cost less.

How it works

Net cost of buying = down payment + closing costs + mortgage payments + ownership costs − what you get when you sell (home value minus selling costs minus the loan balance).
Net cost of renting = total rent paid − the investment gain you would earn on the money not spent on the down payment and closing costs.

Example: A $400,000 home with 20% down at 6.5% for 30 years, compared with $2,500 monthly rent over 7 years, with 3% home growth and 3% rent growth, gives a net cost of about $150,100 to buy and $200,800 to rent. Buying breaks even in year 4. Your own numbers will differ.

Understanding your rent vs buy comparison

The rent vs buy calculator compares the net cost of owning a home with the net cost of renting over the years you plan to stay. Net cost means money spent minus money you get back. For buying, that includes the home’s sale value. For renting, it includes growth on the savings you did not put into a down payment. The break-even year shows when buying starts to cost less.

What changes the answer

  • Years you stay. Buying has large upfront and selling costs. Staying longer spreads them out.
  • Price-to-rent ratio. When homes are expensive compared with rents, renting usually wins for longer.
  • Mortgage rate. Higher rates raise interest costs and push the break-even year later.
  • Home value growth and investment return. Small changes here can flip the result over many years.

A worked example

In the page example, a $400,000 home with 20% down at 6.5% is compared with $2,500 a month in rent over 7 years. Buying needs $80,000 down plus about $12,000 in closing costs at 3%. With 3% yearly growth, the home is worth about $492,000 after 7 years. Selling costs at 6% take about $29,500 of that. Even so, the net cost of buying is about $150,100, compared with about $200,800 for renting. Buying breaks even in year 4.

If you expect to move within 2 or 3 years, closing and selling costs often outweigh any gain, and renting can come out ahead.

Tips and common mistakes

  • Use a realistic ownership cost. Property tax, insurance and upkeep often total a few percent of home value each year.
  • Do not assume prices always rise. Try a lower growth rate to see how the result changes.
  • Be honest about saving. The renting side assumes you invest the money you did not spend on buying.
  • Remember that rent can rise faster than expected in tight markets.

Planning advice

Run a few scenarios with different stay lengths and growth rates. If buying only wins under hopeful assumptions, renting may be the safer choice for now. This tool is a simplified estimate for education, not financial advice. Talk with a licensed financial advisor before making a decision.

Frequently asked questions

Is it better to rent or buy a home?
It depends on how long you stay, the price-to-rent ratio, interest rates and how much the home grows in value. Buying usually wins the longer you stay.
What is the break-even point for buying?
It is the number of years after which buying has a lower net cost than renting. Staying fewer years than that usually favors renting.
What costs does buying include?
Down payment, closing costs, mortgage interest, property tax, insurance, maintenance and selling costs. The ownership cost field covers tax, insurance and upkeep.
Why include investment return on savings?
If you rent, the down payment money can be invested elsewhere. Counting that gain makes the comparison fairer.
Is this financial advice?
No. It is a simplified estimate to help you compare options. Talk to a licensed financial advisor before making a decision.
What is the price-to-rent ratio?
The price-to-rent ratio is the home price divided by one year of rent for a similar home. A $400,000 home that rents for $2,500 a month has a ratio of about 13. A lower ratio usually favors buying, and a higher ratio usually favors renting. Use it as a quick screen, then run the full calculator.
Is renting throwing money away?
Not necessarily. Rent buys housing, flexibility and freedom from repair bills. Owners also pay costs they never get back, such as interest, property tax, insurance, maintenance and selling fees. Whether renting or buying costs less depends on your stay length, local prices and how you invest your savings.
How long should you live in a house to make buying worth it?
There is no single answer, but many comparisons find buying needs several years to pay off because of closing and selling costs. In the calculator’s example, buying breaks even in year 4. Higher rates or slow price growth can push that later. Enter your own numbers to find your break-even year.