Rent vs. buy calculator: which leaves you better off, and when?
“Rent is throwing money away” is one of the most repeated lines in personal finance, and it leaves out a lot. Owners pay interest, property tax, maintenance and the cost of buying and selling, while renters can invest the money they don’t put into a down payment. This calculator puts both paths side by side, so you can see which leaves you with more after the years you expect to stay, and how sensitive that answer is to your assumptions.
Rent vs. buy calculator
- Ahead after 10 years
- –
- Wealth if you buy
- –
- Wealth if you rent
- –
- Buying pulls ahead in
- –
Both sides start with the same cash: the down payment and closing costs. The renter invests it; each month, whichever side costs less invests the difference. Buying wealth is the home’s value after selling costs, minus the loan balance, plus those investments. PMI, the mortgage interest deduction, and taxes on investment gains or home sale gains are not included. Growth rates are assumptions, and real ones vary. Everything here runs in your browser; nothing you enter is stored or sent.
What this calculator can help you understand
- Whether buying or renting leaves you with more after the years you plan to stay.
- When buying pulls ahead, if it does.
- What each path costs month to month in the first year.
- Which assumptions matter most for your answer.
When it’s useful
- Before you start house hunting, to check whether buying fits your plans.
- When a landlord raises the rent and buying starts to look attractive.
- When you might move for work in a few years.
- When deciding between a home and keeping savings invested.
Who it’s for
- Renters thinking about buying their first home.
- People relocating who could rent or buy in the new city.
- Anyone who has heard that renting is a waste and wants to check.
What to enter
| Input | What it means | Where to find it |
|---|---|---|
| Home price | The price of a home you’d buy | Listings in your area |
| Down payment | Cash you’d put down | Your savings plan |
| Mortgage rate | The interest rate you’d expect | Lender quotes or current averages |
| Loan term | Years to repay the mortgage | Usually 30 or 15 years |
| Property tax per year | Yearly tax as a percentage of value | Your county’s rate or a listing’s tax history |
| Maintenance per year | Repairs and upkeep as a percentage of value | A common estimate is 1% |
| Home insurance per year | Your homeowner’s insurance premium | An insurance quote |
| HOA dues per month | Homeowner association dues, if any | The listing |
| Closing costs to buy | Lender and title costs at purchase, as a percentage of price | Often 2% to 5% |
| Costs to sell | Commissions, transfer taxes and fees when you sell | Local agents; often 6% or more in total |
| Home value growth per year | How fast you assume prices rise | Your own assumption |
| Monthly rent | Rent for a comparable home | Listings in your area |
| Rent increase per year | How fast you assume rent rises | Your lease history |
| Renter’s insurance per month | Your renter’s insurance premium | An insurance quote |
| Return on invested savings | What money you don’t spend on housing could earn | Your own assumption |
| Years you’d stay | How long you expect to live there | Your plans |
How to use it
- Enter a home price and a monthly rent for homes you’d consider equivalent.
- Fill in the buying costs, using local figures where you have them.
- Set how long you expect to stay.
- Read which path is ahead, and by how much.
- Change the growth assumptions to see how sensitive the answer is.
Understanding your results
- Wealth if you buy is the home’s value after selling costs, minus what’s left on the mortgage, plus anything you invested because owning cost less than renting in some months.
- Wealth if you rent is the down payment and closing costs you didn’t spend, invested, plus the monthly difference whenever renting cost less.
- Buying pulls ahead in is the first year in which buying wealth is higher.
- The chart shows both paths year by year, so you can see where they cross.
A worked example
Suppose you’re comparing a $400,000 home with $80,000 down at 6.5% for 30 years, against renting a similar place for $2,200 a month. Property tax is 1.1%, maintenance 1%, insurance $1,800 a year, closing costs 3% and selling costs 6%. You assume home values and rent both rise 3% a year, and invested savings earn 5%.
- First-year monthly cost: owning costs about $2,872.62 (including $2,022.62 in principal and interest), against $2,220.00 for rent and renter’s insurance.
- Starting point: both paths start with $92,000, the down payment plus closing costs.
- After 10 years: buying leaves about $234,029, renting about $219,837, so buying is ahead by $14,192.
- Timing: buying pulls ahead in year 9. Selling after 3 years would leave renting ahead by $27,720, and after 5 years renting ahead by $19,364. After 15 years, buying is ahead by $71,794.
- Sensitivity: with home values flat, renting would be ahead by $100,765 after 10 years; at 1% growth, renting by $65,971; at 5%, buying by $110,482.
- What it means: here, buying wins only if you stay close to a decade or more and prices keep rising. The answer depends heavily on how long you stay and how fast values grow.
Common mistakes
- Comparing rent with the mortgage payment alone. Property tax, insurance, maintenance and HOA dues add a lot.
- Ignoring buying and selling costs. They can take years of appreciation to recover.
- Assuming prices always rise quickly. Try a flat or slow scenario too.
- Forgetting what the renter’s savings could earn. A down payment invested elsewhere also grows.
- Comparing different homes. Use rent for a place similar in size and location.
What to do with your result
- If buying only wins over a long stay, be realistic about how long you’ll stay.
- Check your price range with the home affordability calculator.
- See the full monthly payment, including PMI, with the mortgage calculator.
- If you rent, keep the comparison honest by actually investing the difference.
Limitations to keep in mind
This is a simplified model. It doesn’t include PMI, tax deductions, capital gains taxes on investments or a home sale, rent control, or the personal factors that matter in a housing decision, like stability and flexibility. Home values, rents and returns are assumptions; actual results will differ. It isn’t financial, tax or real estate advice.
Frequently asked questions
Is renting really throwing money away?
No. Rent buys a place to live, just as mortgage interest, property tax and maintenance do for owners. Neither is wasted; the question is which path leaves you with more over the time you’ll stay.
How long do I need to stay for buying to make sense?
It depends on prices, rates and rents where you live, but closing and selling costs mean buying usually needs several years to pull ahead. In our example, buying overtakes renting in year 9.
Why does the calculator assume the renter invests?
Because that’s the fair comparison: the buyer builds equity, and the renter keeps the down payment and any monthly savings. If you’d spend that money instead of investing it, renting will do worse than shown.
Does it include the mortgage interest deduction?
No. Since the standard deduction roughly doubled in 2018, most households don’t itemize, so the deduction doesn’t lower their taxes. If you do itemize, buying may look a little better than shown.
What about PMI?
PMI isn’t included. If you’d put down less than 20%, add your estimated PMI to the HOA dues field for a closer comparison, or see the mortgage calculator.
What home value growth should I use?
There’s no reliable forecast. Try a range, such as 0%, 3% and 5%, and see whether the answer changes. If it only favors buying with optimistic growth, that’s worth knowing.
Related reading
Related calculators
This calculator gives estimates for illustration, based on the figures you enter and the assumptions described on this page. It isn’t financial, tax or legal advice, an offer, or a guarantee of any outcome.