Comprehensive Guide
Learn more in our Loans & Mortgage Guide.
How it works
rent vs buy calculator takes your inputs and produces total rent paid, total cost to buy (net), buy monthly payment, equity after your stay. Cost out both sides — rent that grows each year versus a mortgage with equity building — across the years you plan to stay. You provide 10 inputs: Monthly rent (currency, in dollars) (default: 2200 dollars); Home price (currency, in dollars) (default: 450000 dollars); Down payment (currency, in dollars) (default: 90000 dollars); Mortgage rate (percent, in percent) (default: 6.5 percent); Loan term (years, in years) (default: 30 years); Years you plan to stay (years, in years) (default: 7 years); Annual property tax (currency, in dollars) (default: 7200 dollars); Annual home insurance (currency, in dollars) (default: 1500 dollars); Annual home appreciation (percent, in percent) (default: 3 percent); Annual rent increase (percent, in percent) (default: 3 percent). The calculator returns 4 outputs: Total rent paid (a secondary output); Total cost to buy (net) (the primary result); Buy monthly payment (a secondary output); Equity after your stay (a supplementary figure). Loans and mortgages are amortized instruments where the split between interest and principal shifts every month. Understanding the total cost of borrowing — not just the monthly payment — is the difference between a sustainable debt load and one that erodes your net worth over time. This calculator reveals the full amortization picture. The underlying formula: Buy net cost = down payment + payments - final equity | Rent total = rent x (1 + rent inflation)^years With the default values, total cost to buy (net) is computed from the interaction of every input field — change any one of them and the result updates immediately, so you can stress-test different scenarios without re-entering the whole form. Adjust the inputs to match your real financial situation. The defaults are realistic starting points, but every person's circumstances differ — your actual income, expenses, rates, and timelines will produce a different answer. Use the tool iteratively: start with the defaults, then change one variable at a time to see which factor has the largest impact on your outcome.Formula
Buy net cost = down payment + payments - final equity | Rent total = rent x (1 + rent inflation)^years
Tips
- The 5-year rule of thumb exists because it roughly matches closing-cost recovery plus appreciation inflection.
- Run two scenarios: 3% appreciation and 0% — if buying only works at the rosy number, it is a bet, not a plan.
- Count maintenance (usually 1-2% of value annually) even if the calculator stays bare-bones.
- In expensive cities, the same down payment invested historically beats bought housing over 10+ years — check both.
Frequently asked questions
Is it better to rent or buy?
For stays under 3-5 years, renting almost always wins — closing costs and a short amortization window overwhelm appreciation. Beyond 10 years, buying usually wins where prices track inflation or better. The honest answer is your personal horizon, market and rate, which this calculator quantifies.
What costs does buying have that renting does not?
Closing costs (roughly 2-5%), property tax, insurance, maintenance (1-2% of value per year), HOA dues, and the opportunity cost of the down payment. Renting's counter-cost is rent inflation and zero equity — the calculator nets both sides.
How does the down payment fit into the comparison?
It is cash locked in the house. The calculator counts it as part of the buyer's outflow, then partially recovers it through equity at sale. If the same money could grow faster elsewhere, that gap is an implicit renting advantage many comparisons ignore.
What about paying off the mortgage?
By the time a 30-year loan is paid, the buyer's shelter cost falls to taxes and insurance while rent keeps inflating — the classic late-life advantage of ownership. For stays shorter than a full amortization, that advantage rarely compensates for the early costs.