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Renting and buying involve very different cash flows — rent is a pure expense, while a mortgage payment partly builds equity in an asset that (usually) appreciates over time.
This calculator compares the true net cost of each option over a chosen number of years, after accounting for the home equity you'd build by buying.
How it works
Enter your current rent, the price of a home you're considering, your mortgage terms, and ongoing ownership costs (property tax, insurance, maintenance). The calculator totals the cash cost of renting (with annual rent increases) against the net cash cost of buying — total spending minus the home equity you'd have built by the end of the comparison period.
- Enter current monthly rent.
- Enter annual rent increase (%).
- Enter home price.
- Enter down payment (%).
- Enter mortgage interest rate (%).
- Enter loan term (years).
- Enter annual property tax (% of home price).
- Enter annual insurance (% of home price).
- Enter annual maintenance (% of home price).
- Enter closing costs (% of home price).
- Enter annual home appreciation (%).
- Enter years to compare.
- Click Calculate to see your results.
Examples
A 7-year comparison
Renting at $2,000/month against buying a $400,000 home at 6.5% with 20% down often favors buying by year 7, once accumulated equity and appreciation are factored in.
Who should use it
- Deciding whether to buy a home or continue renting given a specific expected time horizon.
- Comparing how sensitive the rent-vs-buy decision is to different mortgage rates or down payment amounts.
Industry applications
- Personal finance and home buying decisions
- Real estate and mortgage advising
Advantages
- Accounts for the home equity built through principal paydown and appreciation, not just raw cash spent.
- Lets you customize property tax, insurance, maintenance, and closing cost assumptions.
Limitations
- Does not model investment returns on the money saved by renting instead of buying.
Common mistakes to avoid
- Comparing only the monthly rent to the monthly mortgage payment, without accounting for property tax, insurance, maintenance, and closing costs on the buying side.
- Ignoring that a shorter time horizon usually favors renting, since closing costs and early-year interest payments take longer to be offset by equity and appreciation.
Best practices
- Run the comparison at a few different time horizons (like 3, 7, and 10 years) since the "cheaper" option often flips depending on how long you plan to stay.
Tips
- The comparison is most sensitive to how long you plan to stay — the longer the time horizon, the more buying tends to benefit from built-up equity and appreciation.