Rent vs Buy Calculator
Compare the true cost of renting vs buying over time.
Cost Summary
This tool is for informational and educational purposes only. It is not a substitute for professional financial, medical, legal, or engineering advice. See Terms of Service.
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This calculator compares the true financial cost of renting vs buying a home over a period of your choosing. It accounts for factors most simple comparisons miss:
- Enter your current rent and expected annual increases. Rent typically rises 3-5% per year in most markets.
- Enter the home purchase details. Include the price, down payment, mortgage rate, and term.
- Set ownership costs. Property taxes, insurance, and maintenance are ongoing costs that renters avoid.
- Set growth rates. Home appreciation affects the buyer's equity. Investment return reflects what a renter earns by investing the down payment and monthly savings instead.
- Choose the comparison period. 5-10 years is typical. Buying usually wins over longer periods due to equity buildup and rent increases.
The calculator considers the opportunity cost of the down payment (the renter invests it instead), annual rent increases, home appreciation, and all ownership costs to give you an apples-to-apples comparison.
About the Rent vs Buy Decision
The rent vs buy decision depends on more than just monthly cost. Key factors include how long you plan to stay, local home appreciation, rent growth trends, your investment alternatives, and the tax benefits of homeownership. This calculator focuses on the pure financial comparison, but lifestyle factors like stability, flexibility, and maintenance responsibility also matter.
Frequently Asked Questions
Is buying always better than renting long-term?
Not always. In expensive markets with slow appreciation, renting and investing the difference can beat buying. The outcome depends on local housing prices, rent levels, mortgage rates, and investment returns. Run the numbers for your specific situation.
What is the break-even year?
The break-even year is when buying becomes cheaper than renting on a net-cost basis, accounting for equity buildup and investment returns. Before this point, renting is the better financial choice.
What investment return should I use?
The default 7% represents the historical average annual return of a diversified stock portfolio after inflation. If you would invest more conservatively, use 4-5%. If you are comparing to index fund investing, 7-8% is reasonable for long time horizons.
Does this calculator include tax benefits?
This version does not include mortgage interest deduction or property tax deduction. Since the 2017 tax changes increased the standard deduction, most homeowners no longer itemize, making these deductions less relevant. The calculator focuses on direct costs and returns.