Rent vs buy calculator

How to use this calculator

Read the full guide: Rent vs buy guide

How it works

You enter monthly rent, home price, down payment, rate, term, and a planning horizon in years. The tool estimates total rent paid over the horizon, total cash to own (down payment, closing costs, monthly PITI, and a maintenance reserve), and rough remaining equity (estimated home value minus loan balance). It charts cumulative rent vs ownership cash outflows year by year.

Worked example

Example: Rent $2,400/month, buy $380,000 with 10% down, 6.75% rate, 7-year horizon, 3% annual home appreciation. Total rent paid might land near $210,000. Total cash to own (down, closing, payments, maintenance) might exceed that, but estimated equity at year 7 can offset part of the gap. The summary line compares rough net position; your market assumptions change the winner.

Time horizon decides this more than price does

If you change one input on this page, change the horizon. Buying carries large one-time costs at both ends: roughly 2 to 5 percent of the price to purchase and 6 to 10 percent to sell once commission is included. Those costs do not care how long you stay, so the shorter the stay, the more they dominate.

At two years, buying almost always loses. You pay perhaps 10 percent of the home's value in transaction costs while building very little equity, because early payments on a 30-year loan are mostly interest. At ten years, buying usually wins, because the costs are spread thin and a fixed payment has stopped rising while rent has not.

The crossover is typically somewhere between four and seven years, and it depends on your specific rent, your local appreciation, and the rate you can get. If there is a real chance you relocate inside three years, that uncertainty is worth more than any spreadsheet result.

The costs renters forget and the ones owners forget

Renters comparing a $2,400 rent against a $2,400 mortgage payment are not comparing like for like. Ownership adds property tax, homeowners insurance, mortgage insurance if you put less than 20 percent down, HOA dues where they apply, and maintenance. A reasonable maintenance reserve is 1 to 2 percent of home value per year, which on a $380,000 house is $317 to $633 a month, and it does not arrive in neat monthly installments. It arrives as a water heater in March and a roof in year eight.

Owners, on the other hand, forget opportunity cost. The $38,000 down payment plus closing costs is money that could have been invested. A rent-versus-buy comparison that ignores what that cash would have earned elsewhere overstates the case for buying, which is why this tool treats equity as an offset rather than as profit.

Renters also have a real advantage that does not show up as a number: they can leave. The cost of a bad job, a bad neighborhood, or a bad landlord is a notice period rather than a sale.

What the appreciation input is really doing

The appreciation assumption is the most powerful and least reliable input on the page. At 3 percent annually, a $380,000 home is worth about $467,000 after seven years. At 1 percent it is about $408,000, and the case for buying weakens considerably. At 6 percent it is roughly $571,000 and buying wins easily.

Nobody can tell you which of those will happen, so the honest way to use this tool is to run it three times: a pessimistic case near zero, a modest case around 2 to 3 percent, and an optimistic case. If buying still makes sense in the pessimistic case, you have a decision that does not depend on being right about the market.

One thing worth knowing: leverage amplifies both directions. With 10 percent down, a 10 percent price rise roughly doubles your equity, and a 10 percent fall can erase it. That is not an argument against buying. It is an argument for a horizon long enough to ride out a bad couple of years.

Reasons that beat the math in either direction

Some good reasons to buy do not appear in the output. A fixed payment is inflation protection on your largest expense. Control over the property matters if you have pets, want to renovate, or need stability for school-age children. And forced savings through amortization genuinely helps people who would not otherwise invest the difference.

Some good reasons to rent are equally absent. Flexibility has value when your career is in motion. So does not owning a roof, a furnace, and a lawn. And if the gap between renting and owning lets you clear high-interest debt or build the emergency fund that keeps you out of it, renting another year is the better financial move regardless of what this calculator says.

For the full framework, read rent vs buy. If the answer points toward buying, move to the affordability calculator and the DTI calculator to see what you can actually finance.

Property tax and insurance are the lines that make a national comparison useless. Two houses at the same price in neighboring towns can differ by several hundred dollars a month in tax, and a coastal or wildfire premium can do the same to insurance. Type the local figures, not a statewide average. The Federal Housing Finance Agency's House Price Index is a history of appreciation, not a promise that your street repeats it. If buying only wins when you type an optimistic appreciation rate, you do not have a decision yet.

What this calculator does not include

• Does not model tax deductions, capital gains, or investment returns on down payment cash.
• Home appreciation and rent growth are assumptions, not forecasts.
• Selling costs at the end of the horizon are simplified.
• Does not capture rent control, HOA special assessments, or major repair shocks in detail.
• Not a recommendation to rent or buy; it structures tradeoffs only.

Frequently asked questions

What maintenance assumption should I use?

Many owners budget 1% to 2% of home value per year. Older homes or condos with large reserves may need more.

Why does equity not equal profit?

Equity is value minus loan balance. You also paid closing costs, interest, taxes, insurance, and maintenance along the way.

Should I use a short or long horizon?

Match the horizon to how long you realistically expect to stay. Under 3 years often favors renting unless numbers are extreme.

Does this include PMI?

If the tool exposes PMI or full PITI fields, include them. Low down payment ownership often carries PMI for years.

Can I trust the rough net line?

Treat it as directional. Confirm with the rent vs buy Learn guide and a CPA for tax-specific questions.

Educational tool only. Not a Loan Estimate, appraisal, tax advice, or legal opinion. Numbers are illustrative unless you enter your own verified inputs.