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Rent vs. Buy Calculator
Compare where you could end up after buying a home versus renting and investing the money you'd otherwise put into the house.
Your result
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How to use this calculator
Enter the price of a home you're considering, the rent for a similar place and how long you expect to stay. Open "Costs, growth rates" to adjust property tax, insurance, maintenance, closing and selling costs, and the growth rates. The result compares your estimated net worth from each path at the end of your stay.
How it's calculated
Renting: Down payment + Closing costs invested, plus whatever you save each month versus owning Each month, owning costs the mortgage payment, property tax, insurance, HOA and maintenance. Whichever path costs less that month invests the difference at the return you choose. Home value and rent grow at your yearly rates. Income taxes on investment gains and mortgage-interest deductions aren't included.
Worked example
- Mortgage payment ≈ $2,023/month; with tax, insurance and maintenance, owning costs about $2,873 in month one
- The renter invests the $92,000 down payment and closing costs, plus the monthly difference
- After 10 years: buyer ≈ $260,000, renter ≈ $209,000 in net worth, with buying pulling ahead in year 6
What tips the balance
Buying tends to look better the longer you stay, the faster home prices rise, and the higher local rents are compared with prices. Renting tends to look better for short stays, in high-price areas where rent is low relative to home values, and when investments earn more than the home appreciates. The price-to-rent ratio (home price ÷ yearly rent) is a quick check: above about 20 often favors renting, below about 15 often favors buying.
Common questions
Is renting throwing money away?
Not necessarily. Owners also pay costs they never get back: interest, property tax, insurance, maintenance and selling fees. What matters is which path leaves you with more net worth, and that depends on prices, rents, rates and how long you stay.
Why include investment returns?
The down payment and closing costs could otherwise be invested. Leaving that out would make buying look better than it is. If you wouldn't invest the difference, set the return to 0%.
Does this include the mortgage-interest tax deduction?
No. Most households take the standard deduction, so many owners get little or no tax benefit from mortgage interest. If you itemize, buying may look somewhat better than shown.
What's a typical break-even time?
Often around 4 to 7 years in many U.S. markets, but it varies widely. The break-even year in your result shows when buying first pulls ahead with your numbers.