Mortgages

Rent vs. Buy Calculator

"Renting is throwing money away" is a myth — and so is "buying always wins." This calculator compares both honestly: it grows your home's value and your mortgage paydown on one side, and invests the down payment plus any monthly savings on the other, then tells you which path leaves you wealthier over the years you plan to stay.

Tested against worked examplesHow we verify

Home price

Monthly rent (comparable home)

Years you'll stay

The single biggest driver — buying rarely wins on a short stay.

Down payment

Mortgage rate

Home appreciation / year

Long-run US home prices track roughly 3–4%/yr.

Rent increase / year

Investment return / year

What the renter earns on the down payment they didn't spend.

Property tax / year

Maintenance / year

Share of home value spent on upkeep annually (~1% is typical).

Buying wins over 7 years by

$4,069

Difference in your net worth at the end of the period.

Net worth if you buy: $173,101
Net worth if you rent & invest: $169,032
Buying breaks even in: 7

BuyRent & invest

Net worth by year — buy vs. rent

Year	Buy	Rent & invest
1	$70,857	$102,991
2	$86,291	$114,017
3	$102,330	$125,061
4	$119,001	$136,106
5	$136,332	$147,130
6	$154,354	$158,114
7	$173,101	$169,032

Compare scenariosTry three values of one input

Vary

Rent vs. Buy Calculator results for three values of Home price
Home price
Buying wins over 7 years by	$29,519	$4,069−$25,451	$21,382−$8,137
Net worth if you buy	$160,036	$173,101+$13,065	$190,411+$30,375
Net worth if you rent & invest	$130,516	$169,032+$38,515	$211,793+$81,276
Buying breaks even in	5	7+2	—

Every other input stays at the value you set above — currently $400,000 for home price. Differences are measured against the first column.

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How this calculator works

Each month the model amortizes the mortgage, grows the home's value, and tracks ownership costs (principal & interest, property tax, insurance, maintenance). The renter starts by investing the buyer's upfront cash (down payment + closing costs); each month, whichever party pays less invests the difference, and both portfolios grow at your investment-return rate. Net worth for buying = home equity (value minus selling costs and remaining loan) plus invested savings; for renting = the invested portfolio.

Assumes a 30-year fixed mortgage, 3% buying and 6% selling costs, $1,500/yr home and $15/mo renters insurance. Taxes on investment gains and the mortgage-interest deduction are not modeled. Results are an educational estimate, not advice — real outcomes hinge on how long you actually stay and on local price and rent movements.

What this assumes

The appreciation, rent growth and investment return you enter. These assumptions move the result more than any other input.
Selling costs of a realistic percentage are applied at the end, which is why short holding periods favour renting so heavily.
The down payment is assumed invested in the renting scenario. If it would not actually be invested, ownership's forced saving is worth more than this shows.

What changes this number

How long you stay: The decisive input. Entry and exit costs are front-loaded, so the answer commonly flips somewhere between year five and year seven.
Rent relative to price: Where local markets differ most. The same national averages produce opposite answers in different cities.
Assumed appreciation: Small changes compound into large differences. Run it pessimistically and see whether the conclusion survives.

A worked example

Take the short stay (3 years) scenario. These figures are produced by the calculator above, not written alongside it, so they always match what the tool returns.

What you enter

Home price: $400,000
Monthly rent (comparable home): $2,400
Years you'll stay: 3 years

What it returns

Renting wins over 3 years by: $22,731
Net worth if you buy: $102,330
Net worth if you rent & invest: $125,061

Under these assumptions, buying never overtakes renting within 3 years — renting and investing the difference stays ahead. A longer stay, faster appreciation, or lower rates would tip it toward buying.

Try an example

Short stay (3 years)Long haul (10 years)Pricey home, cheap rent

Frequently asked questions

Is it better to rent or buy?

It depends mostly on how long you'll stay. Buying carries big one-time costs — roughly 2–5% to buy and 6–8% to sell — so it usually takes several years of appreciation and mortgage paydown to come out ahead of renting and investing the difference. Stay a long time and buying tends to win; move soon and renting often does.

How does this calculator compare the two fairly?

On a net-worth basis. The buyer builds equity as the home appreciates and the loan is paid down. The renter invests the money they didn't sink into a down payment and closing costs — plus, in any month renting is cheaper, the difference — at your investment-return rate. At the end we compare each side's total net worth, after selling costs.

What is the break-even point?

The year your net worth as an owner catches up to and passes your net worth as a renter. Before break-even, renting-and-investing leaves you wealthier; after it, buying does. If your realistic time in the home is shorter than the break-even, renting is likely the better financial call.

Isn't renting just throwing money away?

No more than mortgage interest, property tax, insurance, and maintenance are. Owners spend plenty that doesn't build equity either. The honest comparison isn't rent vs. mortgage payment — it's total cost of each path, including the return the renter earns on money they didn't tie up in a house.

What assumptions does this use?

A 30-year fixed loan, 3% closing costs to buy, 6% to sell, $1,500/yr home insurance, $15/mo renters insurance, and the appreciation, rent-growth, and investment returns you enter. It doesn't model the mortgage-interest tax deduction (which helps buyers who itemize) or local price swings — treat it as a strong directional estimate.

Is it cheaper to rent or buy over seven years?

On our default figures, buying comes out ahead by $4,069 after seven years — net worth of $173,101 against $169,032 renting and investing the difference. Seven years is also where it breaks even, which is why the holding period decides this more than any other input.

This calculator helps answer

Should I rent or buy?

Compare the full cost of owning against renting over your actual time horizon, including the costs of buying and selling that make short stays expensive.