Rent vs Buy Calculator

What makes this comparison honest

Most rent-versus-buy arithmetic compares a rent cheque with a mortgage payment and declares buying the winner. That is not a comparison, because it ignores two things: the money a buyer ties up, and the money an owner spends that a renter does not.

This model makes both sides spend exactly the same cash. The renter invests the down payment and the closing costs on day one, then invests the difference every month that owning costs more than renting. At the end, the buyer holds sale proceeds and the renter holds a portfolio, and those two are what get compared.

Nothing is loaded either way. Buying is charged for maintenance, property tax, insurance, and the cost of selling. Renting is charged for rent increases and gets no equity. Whichever comes out ahead does so on the numbers you supplied.

The years you stay decide almost everything

Buying carries a large fixed cost at each end: closing costs going in, and agent commission and transfer costs coming out. Together those routinely reach eight to ten percent of the price. Appreciation and principal paid down have to cover that before ownership is ahead at all.

Over two or three years they rarely do. Over ten they usually do. The break-even year the calculator reports is the point where the lines cross, and it is far more informative than the verdict at any single horizon.

The assumptions, and why they are yours

Three inputs drive the answer and none of them is a published figure: how fast the house appreciates, how fast rents rise, and what the renter's portfolio earns. There is no official source for any of them, so this site will not pretend there is.

The values shown are editable planning assumptions, not predictions. The productive way to use them is to move them: set appreciation to zero and see whether buying still wins; raise the investment return by two points and see whether it still does. If the answer holds across the range you think plausible, you have a decision. If it flips on a half-point change, you have a coin toss, and the non-financial reasons should decide it.

How the two sides are calculated

Each month, the owner pays mortgage interest and principal, property tax on the current value, insurance, HOA dues, maintenance, and PMI while the loan is above 80% of value. The renter pays rent and renter's insurance. The difference between the two goes into the renter's portfolio, which grows at the return you set.

Each year the house appreciates, the rent rises, and the loan balance falls. At the end, the house is notionally sold: value less selling costs less the remaining balance gives the sale proceeds. Net cost on each side is total cash out less what you are left holding.

net cost of buying = all cash paid − sale proceeds
net cost of renting = the same cash − (portfolio + deposit returned)

A worked example

A $425,000 house with $85,000 down at 6.375%, against $2,150 a month in rent, over seven years, with 3% appreciation, 3% rent growth, and a 6% investment return.

Buying costs about $375,000 in total cash over the period and returns roughly $195,000 of sale proceeds, for a net cost near $180,000. The renter spends about $204,000 on rent, and the down payment, closing costs, and monthly differences grow into a portfolio of roughly $238,000 — a net cost near $135,000.

On these assumptions renting wins over seven years, largely because the 6% portfolio return outpaces 3% appreciation on a leveraged but heavily-taxed-and-maintained asset. Push appreciation to 5% or stretch the stay to fifteen years and the result reverses. That sensitivity is the honest finding, and it is why a single verdict from any calculator should be treated with suspicion.

What no calculator can weigh

• Whether the renter really invests. The model assumes every dollar of difference is invested every month. Most people spend it, which is a genuine argument for buying that no arithmetic captures.
• Tax. The mortgage interest and property tax deductions, and tax on investment gains, are all excluded. Including them tends to favour buying at higher incomes.
• Flexibility. The ability to leave on thirty days' notice has real value in an uncertain job market, and so does not being forced to sell in a bad one.
• Control and stability. No landlord ending a lease, no restrictions on what you change — and, on the other side, no repairs to pay for at midnight.

Once you have a price range, check what payment it implies with the mortgage calculator and what your income supports with affordability. See our methodology for how these tools are built and tested.