Rent vs buy calculator
Enter your rent and the home you'd buy instead, plus how long you'll stay, to see which costs less once every fee, tax and gain is counted.
- Rent paid over 7 years$202,288.92
- Growth on the down payment if invested instead-$37,453.24
- Net cost of renting$164,835.68
- Down payment and buying costs$92,000.00
- Mortgage paymentsof which 139231.83 is interest$169,900.08
- Tax, maintenance and insurance$77,929.68
- Home value after 7 years$491,949.55
- Equity after selling costs-$173,100.83
- Net cost of buying$166,728.93
How to use it
- Enter your rent and how fast it tends to rise where you live.
- Enter the home you'd buy, your down payment, the rate, and how many years you expect to stay. The stay length matters more than anything else.
- Adjust tax, maintenance, appreciation and selling costs for your area if you know them; the defaults are national rules of thumb.
- Read which option costs less and by how much. Try a longer or shorter stay to see where the answer flips.
Worked example
Rent is $2,200 rising 3% a year, or buy a $400,000 home with $80,000 down at 6.5%, staying 7 years.
Renting costs $202,289 in rent, less $37,453 the $92,000 of down payment and buying costs would have earned at 5%: net $164,836.
Buying costs $92,000 up front, $169,900 in mortgage payments and $77,930 in tax, upkeep and insurance, but the home is worth $491,950 and you walk away with $173,101 in equity after selling costs and the remaining balance: net $166,729. Renting comes out $1,893 ahead over 7 years; at 10 years buying wins by $28,221.
How it's calculated
net cost of renting = total rent over the period − growth the down payment and buying costs would have earned if invested
net cost of buying = down payment + buying costs + mortgage payments + tax, maintenance and insurance − equity at the end
equity at the end = home value after appreciation − selling costs − remaining mortgage balance
Rent grows once a year. Tax and maintenance are a percentage of the current home value each year. The mortgage is a 30-year fixed loan amortized month by month. Tax deductions, rent-controlled leases and the return on the monthly difference between the two options are not included.
FAQ
Why does how long I stay matter so much?
Buying and selling costs run 8% to 10% of the price in total and are paid regardless of how long you own. Spread over three years they're crushing; over twelve they're minor. Most comparisons flip somewhere between five and eight years.
Isn't rent just throwing money away?
Mortgage interest, property tax, maintenance and selling costs are also money you never get back. In the example above, the buyer pays more in those than the renter pays in rent for the first several years; buying wins later, through equity and appreciation.
What appreciation rate should I use?
Long-run US home prices have grown around 3% to 4% a year, roughly in line with inflation plus a little. Using a much higher figure makes buying look better than the evidence supports. Try 2% and 5% to see how sensitive the answer is.
Does this include the mortgage interest deduction?
No. Since the 2018 standard deduction increase, most homeowners don't itemize, so the deduction is worth nothing to them. If you do itemize, buying is somewhat better than shown.