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Rent vs Buy Calculator

Compare the true long-term cost of renting versus buying over your planned time horizon — including appreciation, taxes, maintenance, and the opportunity cost of the down payment.

Models both paths month by month and credits the renter with investment growth on the down payment and any monthly savings.

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After 7 years
Buying wins
Buying wins by $8,189 over 7 years.
Buy
$161,968 net
Total out-of-pocket
$335,069
Equity after sale
$173,101
Monthly P&I
$2,023
Rent
$170,157 net
Total rent paid
$231,134
Investment value
$164,912
Difference
$8,189
Horizon
7 years
Overview

How the Rent vs Buy Calculator Works

Rent vs buy isn't really about the monthly payment — it's about where you'd be financially after 5, 7, or 10 years. This calculator simulates both paths month by month: it amortizes the mortgage, appreciates the home, escalates rent, and invests every dollar the renter saves. The winner is the path that leaves you with more money at the end of your horizon.

Formula

The Math Behind the Calculator

Buy net cost = (Down payment + Closing + Σ monthly housing costs) − (Sale proceeds − Selling costs − Remaining loan). Rent net cost = (Σ monthly rent + renters insurance) − (Investment gain on down payment + closing + monthly savings, compounded at the investment return).

Example

A Worked Example

A $400,000 home vs $2,500/mo rent over 7 years, 20% down, 6.5% mortgage, 3% home appreciation, 3% rent increases, 7% investment return → buying may net out roughly $80,000 cheaper after accounting for equity built and selling costs. Shorten the horizon to 3 years and renting often wins.

How to use

How to Use the Rent vs Buy Calculator

  1. 1Pick a realistic time horizon — how long do you actually expect to stay?
  2. 2Enter today's rent and a reasonable annual rent increase (3–5% is typical).
  3. 3Enter home price, down payment, mortgage rate, and term.
  4. 4Add property tax %, insurance, maintenance % (1% of home value/yr is a common rule), and HOA.
  5. 5Set realistic appreciation (3–4%/yr historical) and an investment return (6–8% for a diversified portfolio).
Interpretation

What the Results Mean

  • Buy net cost is total cash out minus the equity you walk away with after selling.
  • Rent net cost is total rent paid minus the investment growth on what you didn't tie up in a down payment.
  • Difference is the dollar amount one path beats the other by at the end of your horizon.
Avoid

Common Mistakes to Avoid

  • Using an unrealistically high home appreciation rate.
  • Forgetting maintenance and selling costs — they erase a surprising amount of equity.
  • Comparing rent to mortgage P&I only, ignoring taxes, insurance, HOA, and maintenance.
Keep going

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Calculate the down payment, loan amount, and loan-to-value ratio for any home price — and see how far you are from the 20% threshold that avoids PMI.

Closing Cost Calculator

Estimate the upfront closing costs and total cash to close on a home — lender fees, title and escrow, prepaid taxes and insurance, recording, and custom line items.

FAQ

Frequently Asked Questions

What time horizon should I use?+

Use the number of years you can confidently commit to staying. Under 3 years, renting almost always wins; past 7 years, buying usually pulls ahead in most markets.

Why does the investment return matter so much?+

The down payment is a big chunk of cash. If invested instead, it compounds — so the renter's opportunity cost is real, not theoretical.

Does this assume I sell at the end?+

Yes. The buy side credits you with sale proceeds minus selling costs and remaining loan balance, which is how lifetime cost is normally compared.

Financial Disclaimer

This calculator is for educational and estimation purposes only. It does not provide financial, mortgage, tax, investment, or legal advice. Actual rates, payments, taxes, fees, insurance costs, eligibility, and loan terms vary by lender, location, credit profile, and market conditions. Always compare official offers and consult a qualified professional before making financial decisions.

Last updated June 2026 · Prepared by the mCalculator Editorial Team