Rent vs Buy Calculator
Should you rent or buy? This calculator compares the total cost of each option over time, including hidden costs like maintenance, opportunity cost of your down payment, tax benefits, and home appreciation.
How to Use This Calculator
- Enter your current monthly rent.
- Input the home price you're considering and your down payment.
- Set the mortgage rate and term.
- Adjust assumptions: rent increase rate, home appreciation, maintenance costs.
- Enter your marginal tax rate for deduction estimates.
- Set how many years you plan to stay.
- Compare the total cost of renting vs. buying at different time horizons.
How the Comparison Is Calculated
The calculator computes total cost of each option over your time horizon:
Renting cost = Total rent paid + Renters insurance − Investment gains on saved down payment
Buying cost = Down payment + Mortgage payments + Taxes + Insurance + Maintenance + Closing costs (buy & sell) − Equity built − Appreciation − Tax deductions
The calculator accounts for the time value of money by including the opportunity cost of your down payment (what it could earn if invested elsewhere).
Example Scenarios
5-Year Stay — High-Cost Market
Rent: $2,500/mo (3% annual increase) · Home: $550,000, 20% down, 6.75% rate
5-year rent cost: ~$159,000 · 5-year buy cost: ~$185,000 (after equity & appreciation)
Renting wins by ~$26,000 at the 5-year mark
10-Year Stay — Average Market
Rent: $1,800/mo (3.5% annual increase) · Home: $350,000, 20% down, 6.5% rate
10-year rent cost: ~$254,000 · 10-year buy net cost: ~$195,000
Buying wins by ~$59,000 at the 10-year mark
3-Year Stay — Relocating Soon
Rent: $2,000/mo · Home: $400,000, 10% down, 6.75% rate
3-year rent: ~$74,000 · 3-year buy: ~$98,000 (closing costs eat appreciation)
Renting wins clearly for short stays — closing costs need time to recover
Tips for Making the Rent vs Buy Decision
- Plan to stay at least 5 years for buying to likely break even vs. renting.
- In high price-to-rent ratio markets (like SF, NYC), renting can be better even long-term.
- Don't forget transaction costs: 2–5% to buy, 8–10% to sell (agent fees + closing).
- Factor in lifestyle flexibility — renters can relocate easily for career opportunities.
- Home appreciation isn't guaranteed — some markets stay flat or decline for years.
- The "forced savings" aspect of a mortgage is valuable if you'd otherwise spend that money.
Frequently Asked Questions
Is it cheaper to rent or buy?
It depends on your market, stay duration, and assumptions about appreciation. Generally buying wins after 5–7 years, but in expensive markets with high price-to-rent ratios, renting can win even over 10+ years.
How long do I need to stay for buying to make sense?
Typically 3–5 years minimum to break even on transaction costs. In expensive markets, 5–7 years. Use this calculator with your specific numbers to find your break-even point.
What costs do renters forget?
Annual rent increases (3–5%/year compounds quickly), no equity building, no tax benefits, and potential moving costs. After 10 years at 4% increases, $2,000 rent becomes $2,960.
What hidden costs does buying have?
Maintenance (1–2% of value/year), property taxes, insurance, HOA, closing costs on both ends, and opportunity cost of your down payment. A $400,000 home can cost $4,000–$8,000/year in maintenance alone.
Should I invest my down payment instead?
Stocks historically return 7–10% while homes appreciate 3–5%. But a home gives leveraged returns (5:1 with 20% down) and forced savings. Both approaches have merit; your answer depends on discipline, risk tolerance, and local market conditions.