Rent vs Buy Calculator

How the comparison works

The calculator follows two versions of you over the years you choose and compares what each would be worth. The buyer pays the down payment and closing costs, then a monthly mortgage payment plus owner costs. The renter pays rent and invests the money the buyer spent up front.

Each month it compares the buyer's outgoings with the rent. If owning costs more, the renter invests the difference. If rent costs more, the buyer invests the difference instead. Investments grow at your chosen return, compounded monthly. Home value and rent rise once a year by your chosen rates, and owner costs are recalculated from the new value.

At the end of each year, the buyer's net worth is the home's value minus selling costs, minus the mortgage balance, plus any investments. The renter's net worth is their investment pot. Buying breaks even in the first year the buyer's figure matches or passes the renter's.

A worked example

Take a $400,000 home with 10% down, a 6.5% mortgage over 30 years and a similar home renting for $2,000 a month. Use 3% yearly growth in home value and rent, a 5% investment return, owner costs of 2% a year, closing costs of 3% and selling costs of 6%.

The monthly mortgage payment is $2,275.44, and the down payment and closing costs total $52,000. After 10 years the buyer is worth $200,119 and the renter $202,786, so renting is ahead by $2,668 and buying does not break even within the period. Compare over 20 years and buying pulls ahead by $110,490, breaking even in year 11.

Why the assumptions decide the answer

This result is not a prediction. Small changes in the growth and return rates swing it sharply. In the example above, raising home value growth from 3% to 4% puts buying ahead by $43,551 after 10 years, breaking even in year 6. Keeping growth at 3% but raising the investment return to 7% puts renting ahead by $34,198. Nobody knows what home prices or markets will do over a decade, so try a cautious and an optimistic set of rates and see whether the answer changes.

Time matters too. Closing costs and selling costs are a large hit that takes years to recover, which is why buying tends to look worse over short periods. If you might move within a few years, set the comparison period to match and see how the result changes.

Choosing your inputs

Closing costs: the Consumer Financial Protection Bureau describes these as the upfront costs of getting your loan and transferring ownership, such as appraisal fees, title insurance and government taxes. Your Loan Estimate lists them, so divide the total by the price to get a percentage.

Owner costs: add your yearly property tax, homeowners insurance and a maintenance allowance, then divide by the price. The CFPB notes that property tax is set by your local or state government and insurance by the insurer, not by the lender, so check both for the specific home.

Selling costs: include agent commission and other fees you would pay as a seller.

Investment return: use a return you would realistically earn after fees on money you would actually invest, not keep in checking.

Beyond the numbers

Owning gives you stability and control over your home, while renting keeps you flexible and free of repair bills. The comparison only works if the renter really does invest the difference every month. To see how much interest the mortgage itself costs year by year, and what extra payments would save, try the loan repayment calculator.