Rent vs Buy Calculator

How this Rent vs Buy Calculator Works

Use this tool to input your home's price and rent details, plus assumptions on appreciation, rent increases, etc. Instantly see:

• How much you'll actually spend renting vs. buying over your chosen time horizon
• Estimated equity in your home if you sell after that period
• A direct comparison of net costs
• Clear, side-by-side breakdowns

Worked Example

Suppose you...
Buy a $360,000 home with 20% down, 6.5% rate, and $2250 comparable rent. In 7 years, you'll pay roughly $254,212 in total buying cost (net of selling proceeds and equity), while renting totals about $194,542. In this scenario, renting is $59,670 less expensive after 7 years. However, if you stay longer or rent prices escalate faster, buying could become the better deal.

Assumptions & Method

• Upfront costs (down payment, closing) and recurring costs (mortgage, property tax, insurance, HOA, maintenance) included.
• Rent increases and home value appreciation are compounded annually.
• Selling costs (e.g. agent, transfer) assumed at 6% of future home value.
• Mortgage is fixed rate; no refinancing, no taxes on gain, ignores tax deduction effects.
• No investment return assumed for upfront savings or non-equity cash.

See FAQ below for specific formula details.

Common Mistakes & Guidance

• Remember: Renting may feel like "lost money," but buying comes with large up-front and ongoing costs too.
• Not accounting for all monthly costs (like insurance, maintenance, or HOA) can make buying seem artificially cheaper.
• House values and rents may rise or fall at rates different from assumptions here.
• Always consider the "expected years in the home" — buying shines long-term.
• This tool does not factor in tax advantages or investment returns on unspent cash; for more precision, consult a financial advisor.

Rent vs Buy Calculator FAQ

1. What costs does buying include here? This estimate includes the down payment, closing costs (approx. 2% of purchase price), mortgage payments (principal & interest), annual property taxes, homeowners insurance and HOA dues (combined as monthly), annual maintenance, and an estimated selling cost of 6% of the final sale price at the end of your ownership.
2. What does the rent estimate include? This is total rent paid, factoring in expected annual increases, with no equity or asset value at the end.
3. What is "Home Equity After Selling"? This is an estimate of how much cash you get back after selling: future value, minus remaining mortgage, minus agent transfer/closing costs.
4. Does this cover tax deductions or investment returns? No—this simplified estimate ignores mortgage deductions/tax credits as well as returns you could earn on cash not spent on buying. See a financial advisor for personalized details.
5. What if I stay for a very short time? Generally, the shorter you own, the less likely buying is to beat renting, due to large upfront and selling transaction costs.