Rent vs Buy Calculator
Whether it is cheaper to rent or buy depends heavily on how long you stay, the price, the rate, and rising rents. This rent vs buy calculator compares the total cost of each over a horizon you choose. For buying, it adds up the down payment, closing costs, mortgage payments, and ownership costs, then subtracts the equity you recover when you sell. Because resale is assumed at the purchase price, that recovered equity is your down payment plus the principal you have paid down. For renting, it totals the monthly rent, escalated each year. The cheaper option and the size of the gap fall straight out of the comparison. Over short horizons, the up-front and ownership costs of buying often make renting cheaper.
Calculate
Default result: $2,506.12
Rent vs Buy Calculator · Materials
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Cost difference over the period
400000 × 80000 × 6 × 30 × 600 × 8000 × 2000 × 3 × 7
Shopping list
- Cheaper option
- rent
- Net cost of buying
- $186,405.22
- Total cost of renting
- $183,899.09
Est. total
$2,506.12
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This calculator provides estimates for general informational purposes only and is not financial, investment, tax, or legal advice. Results are projections based on the figures you enter and the stated assumptions, and actual outcomes will differ. Consult a qualified financial professional before making borrowing, saving, or investment decisions.
Reviewed by the calculators.dev team · Last updated 2026-06-24
Formula reviewed against Rent-vs-buy net-cost model (buy outlay − recovered equity [down payment + principal paid] vs escalating rent) — `amortize` hand derivation (10-VERIFICATION.md)
How to calculate
Enter the home price, down payment, mortgage rate and term, monthly ownership costs, and closing costs for the buy scenario, then the monthly rent and its annual increase for the rent scenario, and the number of years to compare. The calculator totals each path's cost over the horizon, subtracting recovered equity (down payment plus principal paid) from the buy side, and reports which is cheaper and by how much. For the example inputs over 7 years, renting comes out about $2,506 cheaper — a close call, mainly because home appreciation and selling costs are left out.
Buy net cost = down payment + closing costs + (mortgage payment + monthly ownership costs) × months − equity recovered, where equity recovered is the down payment plus the principal paid over the horizon (from the amortization schedule). Resale is assumed at the purchase price, so the sale proceeds equal the home price minus the remaining loan balance, which works out to the down payment plus the principal already paid down. Rent total = the sum of each month's rent, with the rent rising by the annual increase each completed year. Cheaper option = whichever total is lower; the difference is the absolute gap between them. Home appreciation and selling costs are deliberately excluded as a conservative assumption.
Example calculation
Buying a $400,000 home with $80,000 down at 6% over 30 years, plus $600 a month in ownership costs and $8,000 in closing costs, costs about $186,405 net over 7 years once the recovered equity is subtracted. Because resale is assumed at the purchase price, that equity is the $80,000 down payment plus the principal paid down (about $33,154). Renting at $2,000 a month rising 3% a year costs about $183,899 over the same period. Here renting is cheaper, but only by roughly $2,506 — a close call, largely because home appreciation and selling costs are excluded.
- difference
- $2,506.12
- cheaper
- rent
- buyNetCost
- $186,405.22
- rentTotalCost
- $183,899.09
Assumptions
- Resale is at the purchase price (no appreciation), so equity recovered = the down payment plus the principal paid over the horizon. Excluding appreciation makes buying look more expensive — a deliberately conservative assumption.
- Selling transaction costs (agent commission, transfer taxes) are not modelled, so real-world buy costs would be somewhat higher.
- If the comparison horizon outlives the mortgage term, no mortgage payment is charged after the loan is paid off, but monthly ownership costs (tax, insurance, maintenance) keep running for the full horizon.
- Rent rises by a fixed percentage each year, and ownership costs are constant; investment returns on the down payment are not included.
Common mistakes
- Comparing only the monthly payment to the rent. Buying has large up-front and ownership costs and builds equity — this calculator nets all of that out.
- Using too short a horizon. Buying usually wins only over longer periods once the up-front costs are spread out.
- Ignoring that home appreciation is excluded here; including realistic appreciation would shift the result toward buying.
Frequently asked questions
Is it cheaper to rent or buy?
It depends on how long you stay, the price, the mortgage rate, and how fast rents rise. Over short horizons, renting is often cheaper because buying carries large up-front costs; over longer horizons, buying tends to win as those costs spread out and equity builds.
Why does this exclude home appreciation?
To stay conservative and avoid guessing future home prices. Appreciation would lower the net cost of buying, so if buying already wins here, it wins more once you add a realistic appreciation rate.
What counts as the cost of buying?
The down payment, closing costs, mortgage payments, and monthly ownership costs over the horizon, minus the equity you recover when you sell. Because resale is assumed at the purchase price, that recovered equity is your down payment plus the principal you have paid down — so the down payment is not treated as a permanent cost. That net figure is compared to total rent.
Should I always buy if it is cheaper?
Cost is only one factor. Flexibility, maintenance responsibility, job stability, and how long you plan to stay all matter. Use the calculator as one input into a bigger decision.