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Rent vs Buy Calculator

Should you rent or buy?

Compare where you’d end up financially if you bought a home versus renting a similar one and investing the difference. You’ll need a home price, the rent for a comparable place, and a rough idea of how long you’d stay.

  1. Owning costs more than the mortgage

    A buyer pays a down payment and upfront, then a loan payment, property tax, insurance, and upkeep every year, plus a fee to sell at the end. A renter pays rent and renters insurance.

  2. Each side builds wealth differently

    An owner builds as the loan is paid down and the home gains value (). A renter keeps the upfront cash and can invest it. The return a buyer gives up is the of buying.

  3. We compare where you end up

    For each year, we compare what the owner would walk away with after selling to what the renter’s investments would be worth. The first year buying comes out ahead is the year.
The answer depends most on how long you stay, how fast home values grow, and what your investments earn, so try a few values for each. The other defaults are slightly cautious US figures. New to buying? Buying your first home walks through the whole process.
If you buy
LOAN LENGTH (YRS)
$
$
%
$
Yearly costs of owning

Bills that come with owning, on top of the loan. A home's listing usually shows its property tax and HOA dues.

% / yr
$/ yr
$/ mo
% / yr
When you sell

How much the home might be worth later and what it costs to sell. Both are guesses, so try a few values.

% / yr
% of price
If you rent

Use the rent for a place similar to the home above, so you're comparing like with like.

$/ mo
%
$/ yr
How long you'll stay and what money could earn

These two settings usually swing the answer more than anything else.

%
%

If you stay 7 years

Rent

Renting leaves you $57,994 better off than buying

Net cost of buying$224,069
Cost of renting$259,346
Home equity$278,599
Cash from selling$231,249

The two cost rows are plain totals over 7 years: everything paid out, minus (for buying) the cash you get back when you sell. A negative net cost means the sale returned more than you paid in. These totals ignore investment returns. The verdict above also counts what your money could have earned invested at 7% a year (the ), which is why the two can point in different directions.

Renting ahead by

$57,994

if you sell after 7 years

Break-even year

—

buying doesn’t catch up within 7 years

Home equity, year 7

$278,599

home value minus loan, before selling

Cash from selling

$231,249

after 7% cost to sell and loan payoff

Upfront cash, if invested

$198,715

$123,750 grown at 7% a year

What this means

If you stay 7 years and then sell, renting leaves you about $57,994 better off. Buying takes $123,750 upfront (down payment plus closing costs), money a renter could invest at 7% a year instead. In the first year, owning costs about $3,811 a month (loan payment, property tax, insurance, upkeep, minus tax savings), compared with $2,821 a month to rent. Within 7 years, buying never catches up with renting.

This assumes the renter invests the upfront cash, and that whichever choice costs less each month invests the savings, all earning 7% a year. Money left in a checking account would earn far less.

What would change the answer

Stay 10 years instead of 7+$6,223 renting
Home values grow 2% a year instead of 3%+$38,363 renting
Investments earn 6% instead of 7%+$15,529 buying
Get a 6% mortgage rate instead of 6.5%+$12,742 buying

Each line changes one setting and shows which side gains, and by how much.

How far ahead buying is if you sell that year (below zero: renting is ahead)
-$57,994-$46,396-$34,797-$23,198-$11,599$0Yr 0Yr 2Yr 4Yr 6Yr 7

Above the dashed line, buying leaves you better off if you sell in that year. Below it, renting does. Early years usually sit below the line because buying starts with the down payment and closing costs and ends with a cost to sell. The line counts each year’s owning costs after the (including mortgage insurance until it drops off, if you put less than 20% down), the 7% return the renter earns on invested cash, home value growth, and the cost to sell.

Results are estimates based on your inputs and the assumptions on this page, not quotes or advice. A lender, servicer, or tax advisor will give you different numbers. Disclaimer

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Terms used on this page

The comparison above leans on a few financial ideas, starting with the cash a buyer puts in and what a renter could earn on it instead.

Down payment
The part of the price you pay in cash upfront. The rest is your loan. In a rent vs buy comparison, it’s money a renter could invest instead.
Closing costs
One-time fees paid in cash when you buy, such as lender fees, title insurance, appraisal, and transfer taxes. They’re on top of the down payment and you don’t get them back. More
PMI (private mortgage insurance)
A monthly charge most lenders add when you put down less than 20%. It protects the lender if you stop paying, and drops off once you’ve paid the loan down far enough. More
Home equity
The part of your home you own outright: its value minus what you still owe. It grows as you pay down the loan and as the home gains value.
Appreciation
The rise in a home’s value over time. It varies widely by market and can be negative, so treat any rate as an assumption.
Opportunity cost
What your money could have earned if you’d used it differently. Cash tied up in a home can’t also be invested, so a fair comparison counts the returns you give up.
Investment return (discount rate)
The yearly return you assume the renter earns by investing the cash they didn’t spend on buying. A higher rate favors renting; a lower one favors buying.
Break-even year
The first year in which buying, then selling, leaves you better off than renting. If you expect to move before then, renting usually comes out ahead.
Cost to sell
Agent commissions, transfer taxes, and other fees paid when you sell. This calculator defaults to 7% of the sale price. It’s a big reason buying takes years to pay off.
Mortgage interest deduction
If you itemize, mortgage interest reduces your taxable income. It only saves tax to the extent your itemized deductions beat the standard deduction.

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