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mortgageintermediate10 min

Rent vs Buy Calculator

Compare the financial outcomes of renting versus buying a home. See which option builds more wealth over time.

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Monthly Cost (Buy)

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Full Results

Monthly Cost (Rent)

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Monthly Difference

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Net Worth After Buying

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Net Worth After Renting

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Break-Even Year

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Home Value After Stay

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Remaining Loan Balance

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Upfront Cost (Buy)

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Net Worth Comparison
Monthly Buy Breakdown

What is Rent vs Buy Calculator?

A rent vs buy calculator helps you compare the financial outcomes of renting versus buying a home over a specific time period.

How It Works

Enter the costs associated with buying (mortgage, taxes, insurance) and renting, plus your investment assumptions. The calculator projects your net worth in both scenarios.

The Formula

Buy Monthly = P&I + Property Tax + Insurance + Maintenance Rent Monthly = Rent + Renter's Insurance Net Worth (Buy) = Home Value - Remaining Mortgage Net Worth (Rent) = Invested Down Payment + Monthly Savings

This calculator compares the total monthly cost of buying vs renting, then projects your net worth in each scenario after the planned number of years. Buying builds equity but has higher upfront and monthly costs. Renting frees up capital for investing.

Examples

Example: $400k home vs $2k rent over 7 years

20% down, 6.5% rate, 30yr fixed

Buying costs $3,032/month vs renting $2,015/month. After 7 years, buying gives you $495,200 net worth vs $53,300 renting. The break-even year is year 4. However, this depends heavily on home appreciation and investment returns.

Pros & Cons

Pros

  • ✓Makes the rent vs buy decision data-driven
  • ✓Shows break-even timeline
  • ✓Accounts for opportunity cost
  • ✓Compares total wealth, not just monthly costs

Cons

  • ✗Assumes constant investment returns
  • ✗Home appreciation is uncertain
  • ✗Doesn't factor in lifestyle preferences
  • ✗Simplifies tax benefits of homeownership

Common Mistakes to Avoid

  • !Only comparing monthly payments
  • !Ignoring transaction costs
  • !Underestimating maintenance costs
  • !Not considering how long you'll stay

Expert Tips

  • ★Buy if staying >5 years, rent if <3 years
  • ★Factor in 1% of home value annually for maintenance
  • ★Consider the opportunity cost of your down payment
  • ★Don't forget closing costs (2-5%) and realtor fees (5-6%)

Frequently Asked Questions

Is renting really throwing money away?
Not necessarily. Renting can be financially better if you invest the down payment difference and move within a few years. Buying has high transaction costs (closing costs, realtor fees) that take years to recoup. The longer you stay, the more buying makes sense.
What's the 5-year rule for buying a home?
Financial experts generally recommend only buying a home if you plan to stay for at least 5 years. This gives you enough time to recoup closing costs (typically 2-5% of the home price) and ride out market fluctuations.
How does the down payment affect the comparison?
A larger down payment means lower monthly payments and avoids PMI, making buying more attractive. However, it also means more money tied up in the home rather than invested in the market. There's an opportunity cost to consider.
What expenses do first-time buyers often forget?
Many new buyers forget closing costs (2-5% of purchase price), moving expenses, immediate repairs, new appliances, furniture, landscaping tools, and higher utility bills. Budget an additional 1-2% of the home price for unexpected first-year costs.

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