Rent vs Buy Calculator
Compare the total cost of renting versus buying a home over a period of years.
Written by Rahman · Last reviewed
Quick answer
Which one wins depends almost entirely on the rent you're comparing against. On a $320,000 home with 20% down at 6.5%, buying overtakes $2,000-a-month rent in year 6, but against $1,500 rent for the same house it takes until year 30, because the renter invests the down payment instead of sinking it into equity. The comparison sets total rent paid against the full cost of owning (payments, maintenance, tax, insurance and both sets of transaction costs) minus the equity and appreciation you keep.
Both paths are given the same money and compared on what you end up holding. Each year the dearer path sets the budget and the cheaper one invests the difference at your assumed return, and both start with the same capital — the buyer puts it into the deposit and buying costs, the renter invests it. Net cost is what you spent less what you hold at the end: for buying, the equity after selling costs plus anything invested; for renting, the portfolio. Most quick comparisons skip the renter's investments and the owner's tax, insurance and selling costs, which is why they lean toward buying. Figures are nominal and exclude mortgage interest tax relief, HOA dues and rent-vs-own insurance differences.
Results are estimates for general guidance and are not financial, tax or legal advice. Except where a calculator names a currency, figures carry no currency of their own: put in pounds and you get pounds back, put in rupees and you get rupees. Figures depend on the assumptions you enter and on rates that change over time. Check current rates and speak to a qualified adviser before acting on them.
About the Rent vs Buy Calculator
Deciding whether to rent or buy a home is one of the biggest financial choices most people make. Renting offers flexibility and lower upfront cost; buying builds equity but ties up capital and adds maintenance and transaction costs.
This calculator compares the total cost of renting against the net cost of buying over a chosen number of years, accounting for the down payment, buying costs, mortgage payments, property tax, insurance, maintenance, rising rent, the return you'd earn investing the deposit instead, and the equity you keep after selling costs as the home appreciates.
Renting cost = sum of yearly rent (rising each year), with anything not spent on housing assumed invested at your chosen return. Buying cost = down payment + buying costs + mortgage payments + property tax + insurance + maintenance − home equity gained net of selling costs.
Property tax, insurance, maintenance and buying/selling costs are all inputs you can adjust; the defaults are common US rules of thumb, not your specific rates, so update them for your area.
Owning has unrecoverable costs too
The feeling that rent is wasted while a mortgage builds equity treats the whole mortgage payment as if it were saving. Only the principal part is. Everything else is money that leaves and doesn't come back, exactly like rent, and in the early years of a loan it's most of the payment.
On a $320,000 home with 20% down at 6.5% (the figures this calculator opens with), the first year's mortgage interest is roughly $16,600. Property tax at 1.1% adds $3,520 and maintenance at the common 1% rule of thumb adds another $3,200. That's around $23,300 a year, or about $1,940 a month, that buys no equity at all, before insurance, HOA fees or what the deposit could have earned elsewhere. The calculator starts with $1,500 rent, so that's the figure it's really being compared with.
- The honest comparison is rent against the unrecoverable cost of owning, not rent against the mortgage payment.
- Transaction costs are the other half of the picture: commonly 2% to 5% to buy in the US and 5% to 6% to sell. A round trip on that same $320,000 home can approach $25,600.
- Those costs are what create a break-even point. Before it, buying loses whatever prices do. After it, rising prices and repaying the principal have time to make up for them.
The answer depends on inputs nobody knows
This comparison is unusually sensitive to guesses about the future: house price growth, rent increases, and the return you'd earn on the deposit if you invested it instead. A small change to any of them can flip the result, so it's best to treat the answer as a range rather than a verdict.
The deposit is the input people most often forget. Money used as a down payment is money not invested elsewhere, and over many years that missed return is a real cost of buying that never shows up on a mortgage statement.
- Test the result by setting house price growth to zero and seeing whether buying still wins.
- How long you stay matters more than almost anything else. If you'll only stay a short while, buying rarely wins at any realistic growth rate.
- Non-financial factors (security of tenure, freedom to modify, mobility for work) are frequently the deciding considerations, and no calculator can weigh them for you.
Frequently Asked Questions
Why does the time period matter so much?
⌄
Buying has high upfront costs that take years to recover through equity. The longer you stay, the more buying tends to win; for short stays, renting is usually cheaper.
What is the break-even point?
⌄
It is the number of years after which buying becomes cheaper than renting. Try different "years compared" values to find roughly where the cheaper option flips.
Does this include taxes and fees?
⌄
Yes. Property tax, insurance, maintenance, and buying/selling costs are all adjustable inputs, not left out. The defaults are common US rules of thumb rather than your specific rates, so update them to match your area before relying on the result.
Is buying always the better choice?
⌄
No. Renting can be smarter if you may move soon, if local prices are very high relative to rents, or if you would invest the difference elsewhere.
Sources
- Tax Foundation — Property Taxes by State and County (2026) — Effective property tax rates by state and county, and the reason this page treats its 1.1% property-tax default as a starting point rather than a fact. Rates run from about 0.29% in Hawaii to 1.88% in New Jersey (a 6.5× spread), against a median across states of roughly 0.79%, so the 1.1% default is on the high side and the input is one of the few that genuinely moves the answer. Update it for your own county before trusting a result. Same dataset behind the median-home data study in the guides.