How to use this rent vs buy calculator
Fill in three groups of numbers:
- Renting: your monthly rent and how much you expect it to rise each year.
- Buying: the home price, down payment, mortgage rate and term, how fast you expect the home's value to grow, and the yearly costs of owning: property tax and upkeep (including insurance), as a percentage of the home's value. Add the closing costs you'd pay when buying and the selling costs when you move.
- Your plans: how many years you'll stay, and the return you could earn by investing money you don't spend on housing.
The results show which option leaves you better off and by how much, the break-even year, the monthly costs, and a chart of your net worth each year under both choices.
How the comparison works
The calculator follows two versions of you over the same years.
Both investment accounts grow at your chosen return. Comparing net worth, rather than just monthly costs, captures equity, home price growth and the opportunity cost of the down payment together.
Worked example
Buying costs more each month here, but the home's growth and the shrinking mortgage balance catch up after about eight years.
What changes the answer
The same example gives very different results when one assumption moves:
| Change | Result after 10 years |
|---|---|
| Stay 5 years instead of 10 | Renting ahead by about $14,585 |
| Stay 7 years | Renting ahead by about $2,035 |
| Home value grows 4% a year | Buying ahead by about $66,729 (break-even year 5) |
| Home value grows 2% a year | Renting ahead by about $18,320 |
| Investments return 8% a year | Renting ahead by about $18,147 |
Three things matter most: how long you stay, because buying and selling costs need time to recover; home price growth compared with investment returns; and the price-to-rent ratio where you live.
When buying tends to make sense
- You expect to stay in the area for many years, comfortably past the break-even year.
- Homes cost a modest multiple of what similar homes rent for.
- You can make a solid down payment and still keep an emergency fund.
- You value stability and the freedom to change your home.
When renting tends to make sense
- You may move for work or family within a few years.
- Rents are low compared with purchase prices in your area.
- You'd prefer to keep cash flexible and invest it.
- You don't want responsibility for repairs and upkeep.
Tips for using the calculator
- Use real numbers. Look up the property tax rate in your county and get an insurance quote.
- Be honest about investing. The renter only wins if the difference really gets invested; if it would be spent, buying may come out further ahead.
- Test a range. Nobody knows future home prices or returns. Try optimistic and cautious values and see whether the answer changes.
- Check the monthly cost. Even if buying wins on paper, make sure the monthly cost of owning fits your budget, using our mortgage calculator.
The price-to-rent ratio
A quick way to gauge your local market is the price-to-rent ratio: the home price divided by a year of rent for a similar home. In the example above, $400,000 ÷ ($2,400 × 12) ≈ 13.9. The higher the ratio, the more expensive buying is compared with renting, and the longer buying tends to take to pay off. It's a rough guide only, so use the full calculator for your own numbers.
What this calculator doesn't include
The comparison leaves out income taxes (including the mortgage interest deduction and any tax on investment gains or home sale profits), PMI, HOA special assessments, moving costs, renters insurance and changes in mortgage rates. It assumes the home is sold at the end of your stay. Treat the result as a way to compare scenarios, not a prediction of what will happen.