How this rent vs. buy calculator works
Most "rent or buy" debates focus on the monthly payment, but that comparison is misleading. A mortgage payment builds equity, while rent does not — yet buying also locks up a large down payment, adds property taxes, maintenance, and thousands of dollars in closing and selling costs. The honest way to compare the two is to look at the total net cost over the years you actually plan to live there.
This calculator does exactly that. For each year it tracks:
- Buying: your upfront cash (down payment + closing costs), mortgage interest and principal, property tax, and maintenance — then subtracts what you'd walk away with if you sold the home (its appreciated value minus selling costs and the remaining loan balance).
- Renting: your total rent paid (rising each year), minus the investment growth on the cash you didn't tie up in a house. This is the "opportunity cost" most simple calculators ignore.
When buying tends to win
- You'll stay at least 5–7 years, giving equity time to outgrow transaction costs.
- Home prices in your area are rising steadily.
- Rent is high relative to home prices (a low price-to-rent ratio).
- You have a stable income and an emergency fund beyond the down payment.
When renting tends to win
- You might move within a few years for work or lifestyle reasons.
- Home prices are flat or falling, or mortgage rates are very high.
- You can earn a strong return investing your down payment elsewhere.
- You value flexibility and want to avoid maintenance and property-tax risk.
Key terms explained
Closing costs
One-time fees paid when you buy — lender fees, title insurance, appraisal, and taxes — typically 2–5% of the price. They're a sunk cost that buying has to "earn back."
Selling costs
What it costs to sell later: real-estate agent commission, transfer taxes, and closing fees, often around 6–8% of the sale price. This is why short stays favor renting.
Opportunity cost / investment return
Renters don't sink a down payment into a house, so that money can be invested. The expected annual return on those funds is a real benefit of renting — this calculator credits it back against rent.
Frequently asked questions
- Is it really cheaper to rent than to buy?
- It depends entirely on how long you stay, local prices, and rates. Use the calculator with your own numbers — the answer changes dramatically with the time horizon.
- What's a good rule of thumb?
- The "5-year rule" is a common starting point: if you won't keep the home at least five years, renting is often the safer financial choice. The calculator gives you a more precise break-even.
- Does this account for tax deductions?
- Not yet — mortgage-interest deduction depends heavily on your personal tax situation. The estimate is intentionally conservative. Treat the result as a guide, not tax advice.
- Are my numbers saved or shared?
- No. Everything runs in your browser. We don't store, send, or see any values you type.