Rent vs buy calculator
Money & financeIs it better to rent or buy your home?
Compare renting and buying over the years you plan to stay, with every assumption in view.
What you enter stays on your device while you use this tool. Opening a shared link sends the settings in its address to HowToolbox to prepare the page.
Assumptions
Owner costs cover maintenance, property tax, insurance and fees. Buying costs include transfer tax; selling costs the agent's fee.
After 10 years
Buying is $19,172 ahead
Over 10 years; buying pulls ahead after about 4.7 years.
Mortgage of $200,000: $1,055.67 a month.
Both start with the same cash and spend the same each month; whoever pays less invests the difference. No taxes, tax deductions or rate changes are included.
| Buy | Rent | Difference | |
|---|---|---|---|
| Wealth after 10 years | Highest $152,887 | $133,716 | -$19,172 |
| Cost of housing over 10 years | Lowest $69,855 | $89,027 | +$19,172 |
| First month's cost | $1,368.17 | $1,000.00 | -$368.17 |
| Paid upfront | $55,000 | $0 | -$55,000 |
| Paid over 10 years | $222,742 | $134,441 | -$88,302 |
Buy
- Wealth after 10 years
- Highest $152,887
- Cost of housing over 10 years
- Lowest $69,855
- First month's cost
- $1,368.17
- Paid upfront
- $55,000
- Paid over 10 years
- $222,742
Rent
- Wealth after 10 years
- $133,716
- Cost of housing over 10 years
- $89,027
- First month's cost
- $1,000.00
- Paid upfront
- $0
- Paid over 10 years
- $134,441
Wealth year by year
Wealth if you sold or moved out at the end of each year: $152,887 buying and $133,716 renting after 10 years.
- Buy
- Rent
- Break-even: 4.7
| Year | Buy | Rent |
|---|---|---|
| 0 | $42,500 | $55,000 |
| 1 | $52,105 | $62,268 |
| 2 | $62,000 | $69,670 |
| 3 | $72,196 | $77,206 |
| 4 | $82,702 | $84,876 |
| 5 | $93,530 | $92,680 |
| 6 | $104,691 | $100,619 |
| 7 | $116,194 | $108,692 |
| 8 | $128,054 | $116,900 |
| 9 | $140,280 | $125,241 |
| 10 | $152,887 | $133,716 |
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Compare renting and buying over the years you plan to stay, with every assumption in view.
How to use
- Enter the home's price, your down payment, the mortgage rate and the rent of a comparable home.
- Set how many years you expect to stay, then check the assumptions: value and rent changes, the return on savings, and the owner, buying and selling costs.
- Read which option leaves you wealthier after those years, and the year buying pulls ahead, in the comparison and the chart.
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How it works
The calculator follows two households with the same money. One buys: it pays the down payment and buying costs, then the mortgage and the costs of owning. The other rents and invests the cash the buyer put into the home. Each month, whoever pays less for housing invests the difference. After the years you choose, the buyer sells the home, and the two are compared by the wealth they have left.
Buyer's wealth = V × (1 − s) − L + I_b, where V is the home's value then, s the selling costs, L the loan still owed and I_b the buyer's savings. Renter's wealth = I_r, the savings grown at the return rate. For example, a 120,000 home bought with cash against 500 a month in rent, with nothing growing and no costs, leaves the buyer 12,000 ahead after two years: exactly the rent saved.
Buying usually starts behind because of the buying and selling costs, then catches up as the loan is repaid and the home's value grows. The longer you stay, the more likely buying wins; a high return on savings or a fast-rising rent shifts it. The method is the opportunity-cost comparison used by well-known rent-or-buy calculators, and the US Consumer Financial Protection Bureau lists the owner costs to count beyond the mortgage.
The result is only as good as the assumptions. Taxes, mortgage interest deductions, rate changes, renovation and moving costs are not included, and every rate stays the same each year.
Worked example
What happens when a home bought for 120,000 in cash is compared with rent of 500 a month?
- Assume 3 years, no price or rent changes, no investment return and no buying, selling or owner costs.
- The buyer keeps the home and saves the rent: 500 × 36 = 18,000.
Buying leaves 18,000 more wealth in this simplified example.
Frequently asked questions
What are owner costs?
Everything owning costs besides the mortgage: maintenance and repairs, property tax, insurance and housing company or association fees. 1 to 2 % of the home's value a year is a common rule of thumb; use your own figure if you know it.
Why does the return on savings matter?
The money a buyer puts into the home could otherwise be invested. The higher that return, the more the renter's savings grow, and the longer buying takes to pull ahead.
Why is buying behind in the first years?
Buying and selling costs are paid only once but are lost at once, and early mortgage payments are mostly interest. It takes a few years of repayments and value growth to make them up.
Can I compare buying without a mortgage?
Yes. Set the down payment equal to the purchase price. The comparison still includes owner costs and the return the renter could earn on that cash.
Does the cheaper monthly option always win?
No. The comparison also counts investments, the remaining loan and the proceeds from selling the home. A lower monthly outlay alone does not tell you the final wealth.
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