Rent vs Buy Calculator
Compare the true long-term cost of renting vs buying a home, including opportunity cost of the down payment.
Rent vs Buy Calculator
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The rent vs buy decision is one of the biggest financial choices most people face. This calculator shows the true cost of renting versus buying over a period you choose — including mortgage payments, down payment, property tax, maintenance costs, home equity gained, and the opportunity cost of the money tied up in your down payment. The headline comparison is net cost: what renting actually costs after accounting for investment gains on your down payment capital, versus what buying actually costs after accounting for the equity you build and appreciation of the home. Neither is automatically better — it depends on your specific numbers. The commonly cited "5-year rule" (buy if you plan to stay 5+ years) is a useful starting point, but this calculator shows you exactly where the break-even point is for your situation. In fast-appreciating markets, buying can win at 3 years. In stagnant or expensive markets, renting can be the better financial choice at 7+ years.
How to Use the Rent vs Buy Calculator
The Rent vs Buy Calculator is designed to give you an accurate answer in seconds. Follow these steps:
- 1Enter your details into the input fields above.
- 2Adjust any settings, toggles, or unit selections to match your situation.
- 3Your results appear automatically — review the output and adjust any inputs to explore different scenarios.
No account or sign-up required. All calculations run locally in your browser — nothing is stored or transmitted to any server.
How It Works
Net Buying Cost = (Mortgage + Tax + Maintenance) − Equity Gained | Net Renting Cost = Total Rent − Investment Growth on Down Payment
The calculator uses standard financial formulas for each component: **Buying costs:** Monthly mortgage payment uses the amortisation formula P × [r(1+r)^n] / [(1+r)^n - 1]. Annual property tax and maintenance are added as a percentage of home value. At the end of the period, home equity is calculated as the appreciated home value minus the remaining mortgage balance. **Renting costs:** Total rent paid over the period, minus the investment growth on the down payment if it had been invested instead of used for the property. The net cost for each path is: total money paid out, minus any wealth gained (equity for buyers, investment gains for renters). The option with the lower net cost wins the calculation for that time period.
Frequently Asked Questions
Is it always better to buy than rent?
No — it depends on your time horizon, local market, and opportunity cost of capital. Buying is typically better if you stay 5+ years in a market with reasonable appreciation and can afford a 20% down payment. Renting is often better in very expensive markets (where price-to-rent ratios are high), if you move every 2–3 years, or if the down payment capital can earn higher returns invested elsewhere. This calculator gives you the answer for your specific numbers.
What is the 5-year rule for buying vs renting?
The 5-year rule is a common guideline suggesting you should only buy a home if you plan to stay at least 5 years. The logic: transaction costs (realtor fees, stamp duty, closing costs) on a home typically amount to 5–8% of the purchase price, and you need enough appreciation and mortgage paydown over time to recover those costs. Below 5 years, most buyers do not break even relative to renting. This calculator shows you exactly where YOUR break-even point falls.
What is opportunity cost in the rent vs buy decision?
Opportunity cost is what the down payment money could earn if invested instead of put into a property. A $80,000 down payment invested in index funds at 7% annual return grows to approximately $157,000 over 10 years. That growth is a real financial cost of buying — the money you "gave up" by putting it into housing equity instead of the stock market. This calculator factors in that opportunity cost using an adjustable investment return rate.
When does renting make more financial sense than buying?
Renting can be the better financial choice when: price-to-rent ratios are above 20 (common in expensive cities), you plan to move within 3 years, your down payment capital can earn higher returns elsewhere, the mortgage payment would be significantly higher than rent for a comparable property, or you need financial flexibility for other life goals. High property taxes and HOA fees can also tilt the calculation toward renting.
Does this calculator include property taxes and maintenance?
Yes. Annual property tax is entered as a percentage of home value (default 1.2%, typical US average). Annual maintenance is entered as a percentage of home value (default 1%). These are added to the total buying cost. Both are adjustable — lower them for newer properties or low-tax areas, raise them for older homes or high-tax states. These costs significantly affect the break-even point and are often underestimated by first-time buyers.