Rent vs Buy Calculator
Is it cheaper to rent or buy over the next 5-30 years? Compare total costs, net wealth, and find the break-even year. Works with any currency.
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How to Use This Calculator
Tab "Compare"
Enter the home purchase price, down payment, mortgage rate, and other buying costs alongside your monthly rent and renter's insurance. The calculator compares total costs and net wealth over your analysis period. Net wealth for buying is home equity; for renting, it is invested savings (down payment + monthly cost difference compounded at your chosen investment return).
Tab "Year-by-Year"
Uses the same inputs and shows a detailed annual table: each year's buy costs (mortgage, property tax, maintenance, insurance), rent costs (rent + insurance), cumulative totals, home equity, and invested savings. This lets you see exactly when costs cross over and how wealth builds on each side.
Tab "Break-Even"
Finds the break-even year — the first year where buying's net wealth exceeds renting's net wealth. If you plan to stay less than the break-even number of years, renting is financially more efficient. If you stay longer, buying wins.
The Formulas
M = P × r(1+r)n / ((1+r)n − 1)
where P = loan amount, r = monthly rate (annual rate / 12), n = total months (term × 12)
Annual buy cost:
Buy Cost = (Mortgage Payment × 12) + (Home Value × Property Tax Rate) + (Home Value × Maintenance Rate) + Home Insurance
Annual rent cost:
Rent Cost = (Monthly Rent × 12) + Renter's Insurance
Rent increases each year by the annual rent increase rate.
Home equity:
Equity = Home Value after Appreciation − Remaining Mortgage Balance
Invested savings (renter):
The renter invests the down payment plus any monthly cost difference (buy cost − rent cost) at the specified investment return rate, compounded monthly.
Net wealth:
Net Wealth (Buy) = Home Equity − Total Cumulative Buy Costs
Net Wealth (Rent) = Invested Savings − Total Cumulative Rent Costs
Break-even:
The first year where Net Wealth (Buy) ≥ Net Wealth (Rent).
All calculations are universal and pre-tax. Closing costs, selling fees, PMI, HOA, and tax deductions are not included. Results are estimates.
Worked Examples
Example 1 — $400K home vs $2,000/mo rent
A buyer purchases a $400,000 home with 20% down ($80,000) at 6% over 30 years. A renter pays $2,000/mo with 3% annual increases, investing the down payment and cost difference at 7%.
After 10 years, the buyer has built significant home equity through appreciation and mortgage paydown, while the renter has grown invested savings. The comparison depends on actual appreciation and investment returns.
Example 2 — High-cost city: $800K vs $3,500/mo
In a high-cost market, a buyer puts 20% down ($160,000) on an $800,000 home at 6.5% for 30 years. The renter pays $3,500/mo with 3% annual increases.
In high-cost markets, the larger down payment opportunity cost and higher mortgage payments often push the break-even point further out, making renting financially competitive for longer periods.
Example 3 — Low rates: $350K vs $1,800/mo
With a lower mortgage rate of 4%, a $350,000 home with 20% down ($70,000) becomes more affordable. Monthly rent is $1,800 with 3% annual increases.
Lower mortgage rates significantly reduce monthly payments and tilt the comparison toward buying. The buyer's mortgage payment ($1,337) is well below the renter's payment ($1,800), and the difference grows as rent increases annually.
Understanding Rent vs Buy
Why the Decision Is Not Just About Monthly Payment
Comparing monthly mortgage to monthly rent misses most of the picture. Buying involves property taxes, maintenance, insurance, and the opportunity cost of tying up a large down payment. Renting frees up capital for investment. The real question is: which option builds more wealth over your timeframe?
Key Factors That Favour Buying
Long time horizon: The longer you stay, the more equity you build and the more rent increases you avoid. Low mortgage rates: Lower rates mean more of each payment goes to principal. Strong appreciation: Markets with steady price growth reward homeowners. Inflation hedge: A fixed-rate mortgage payment stays constant while rent rises.
Key Factors That Favour Renting
Short time horizon: Transaction costs (closing costs, selling fees) make buying expensive for short stays. High home prices relative to rent: When prices are high but rents are moderate, the math favours renting. Strong investment returns: If the stock market outperforms real estate, investing the down payment elsewhere wins. Flexibility: Renting allows easy relocation without selling costs.
What This Calculator Does Not Include
For simplicity, this universal calculator omits closing costs (typically 2–5% of purchase price), selling costs (5–6% in agent commissions), PMI (if down payment is below 20%), HOA fees, mortgage tax deductions, and capital gains exclusions. These factors vary significantly by country. For country-specific versions that include these, use the country links below the calculator.