Rent vs Buy Calculator
Compare buying (mortgage, tax, maintenance) against renting and investing the difference. Uses a rigorous total-cost model — not just "mortgage vs rent."
Results after 10 years
How this works: for each year we track every dollar the buyer spends (mortgage, tax, maintenance, insurance, closing costs) and every dollar the renter spends (rent). The renter invests both the down payment and the monthly difference (when buying is more expensive) at your assumed return. At the end we compare the buyer's home equity minus remaining loan balance against the renter's investment portfolio.
Which is right for you?
The classic advice — "renting is throwing money away" — is a half-truth that has cost people a lot of money. Buying looks great when home prices rise quickly. It looks terrible when prices are flat and interest rates are high. And the same house can be a "buy" or a "rent" depending on how long you'll live there and what you'd otherwise do with the money.
The buyer's real costs
People compare their potential mortgage payment to their current rent and think the mortgage is close. It usually isn't. Add property tax (0.5%–2.5% of the home's value each year), maintenance (budget 1% per year — roofs, HVAC, water heaters, appliances all wear out), insurance, HOA dues if applicable, and PMI if you put down less than 20%. Now compare that to the rent.
The renter's real costs
Renting isn't free money either. Rent goes up over time. And an honest comparison has to include what the renter doesn't spend on a down payment: if they invest that money instead, it compounds. A $90,000 down payment invested at 7% is worth about $354,000 in 20 years.
Break-even rules of thumb
- Under 3 years: renting almost always wins because of closing costs and agent fees on the sale.
- 3–5 years: depends heavily on the market and your local rent-to-price ratio.
- 5+ years: buying often wins if you can afford the down payment without wrecking your emergency fund.
Run the numbers with realistic inputs (don't use the wildly optimistic appreciation of the last five years as your forever assumption) and let the calculator make the call.
FAQ
Is it better to rent or buy a home?
It depends on how long you'll stay, what mortgage rates look like, and whether prices in your area are rising, flat, or falling. As a rough guide, buying tends to win once you'll stay 5+ years and rent is a large share of a comparable purchase. Below that, transaction costs (closing costs, agent fees, moving) usually eat the benefit.
What costs of homeownership do people forget?
Property taxes, homeowners insurance, maintenance (budget 1% of the home's value per year), HOA dues, PMI if you put less than 20% down, and — most importantly — the opportunity cost of your down payment. Money tied up in home equity is money not compounding in the stock market.
What is 'opportunity cost' of a down payment?
If you put $60,000 into a house, that money can't also earn returns in an index fund. Over 30 years at a 7% real return, $60,000 becomes about $457,000. Any honest rent-vs-buy comparison has to account for what the renter does with the money they didn't spend on a down payment.
How much should I put down on a house?
20% avoids PMI and gets you the best rate, but it isn't required. FHA loans allow 3.5%; conventional loans allow as little as 3%. The right number balances keeping an emergency fund intact, avoiding PMI when you can, and not stretching your budget too thin.
Do I really pay more than the home price in interest?
On a 30-year mortgage at 7%, yes — you typically pay roughly the same amount in interest as the original loan amount. That's why extra principal payments early in the loan save so much. Our loan payment calculator shows the exact amortisation.