About this tool
Rent vs buy, explained
Renting or buying comes down to two totals over time: everything each option costs you, minus the wealth it leaves you with. This calculator compares both month by month over 30 years, including what your down payment could earn if you rented, and tells you which option costs less for the time you expect to stay. Every assumption is a field you can change.
How to use it
- 1In the Home tab, enter the Home price, Down payment, Mortgage rate and Loan term, plus the Buying costs and Selling costs as a percentage of the price. Or click Starter condo, Family house or City apartment to load a starting point.
- 2In the Owner costs tab, set Property tax per year, Home insurance per year, HOA per month, Maintenance per year and Home value growth.
- 3In the Renting tab, enter the Monthly rent for a comparable home, the Rent increase per year and the Return on invested savings, and pick your currency.
- 4Move How long you stay to your expected stay and read the verdict and the break-even year. Switch to Table for each year's numbers, or keep them with Copy link, Download CSV or Print or PDF.
How it works
How the net cost is calculated
Each month, the owner pays the mortgage, property tax and maintenance (both a percentage of the home's value that year), a twelfth of the yearly insurance, and the HOA fee. The renter pays that year's rent, which rises once a year by the rent increase.
Both households start with the same cash, the down payment plus the buying costs, and each month both spend whichever monthly cost is higher. The renter invests that starting cash on day one, then the difference every month owning costs more. When rent costs more, the owner invests the difference instead. Investments grow at the return on invested savings: that is the opportunity cost of the down payment.
The net cost of each option is all the money it committed minus the wealth left at that point. For the renter, the wealth is the investment portfolio. For the owner, it is the equity from selling at the end of that year (the home's value, grown by the home value growth, minus selling costs and the loan balance) plus any portfolio. Buying costs count from day one, selling costs only when you sell.
The break-even year is the first year in which buying's net cost drops below renting's. The break-even rent is the monthly rent at which both options cost the same over your stay: above it, buying wins.
With the starting numbers, a $450,000 home with 20% down at 6.2% over 30 years against $2,400 a month in rent, owning costs $3,142 in the first month. Buying breaks even in year 8 and saves $24,453 over a 10-year stay, and the break-even rent for that stay is $2,263.
Monthly payment = L × r / (1 - (1 + r)^-n), where L = price - down payment, r = yearly rate / 12 and n = term in months. Net cost = money committed - wealth left (portfolio for the renter, equity if sold plus portfolio for the owner).
When to use it
Ways people use it
Before you start house hunting
Put in your current rent and the price of homes you are looking at to see whether buying pays off, and after how long.
Deciding how long you will stay
The break-even year is the minimum stay for buying to win. If you expect to move before then, renting is likely the cheaper choice.
Stress-testing the assumptions
Set home value growth to zero, or raise the mortgage rate, and watch the break-even year move. A verdict that flips on small changes is a close call.
Comparing two markets
Run two cities or neighborhoods with their own prices, rents and taxes, and keep each with Copy link.
FAQ
Questions people ask
Is it better to rent or buy a house?
It depends on how long you stay, the price compared with the rent, your mortgage rate, how fast prices and rents grow, and what your savings would earn otherwise. Buying has large costs when you get in and when you get out, so it needs time to catch up. The break-even year tells you how much time, with your own numbers.
Is paying rent throwing money away?
Rent pays for a place to live, just as mortgage interest, taxes and upkeep do for an owner. The fair comparison counts what each keeps: the owner keeps equity, the renter keeps the down payment and monthly savings, invested. That is what the net cost lines show.
What costs of owning a home do people forget?
Closing costs when you buy, agent and transfer fees when you sell, maintenance, property tax, insurance and HOA fees. Each has its own field here, since leaving them out makes buying look better than it is.
How does a bigger down payment change the result?
A bigger down payment means a smaller loan and less interest, but that money stops earning the return on invested savings, which the renter in the comparison keeps earning. Roughly, a larger down payment helps buying when the mortgage rate is above the return you expect, and helps renting when the return is higher.
What return should I enter for invested savings?
The yearly return you would realistically earn, after fees, on money you did not put into the home. Since the result can depend on it, try a cautious figure and a higher one and see whether the verdict changes.