Compare the total cost of renting versus buying a home over your planned time horizon.

About the Rent vs Buy Calculator

The question of whether to rent or buy is rarely settled by the monthly payment comparison people usually make, because owning carries costs a renter never sees and builds equity a renter never gets. This calculator models both paths over the specific number of years you plan to stay and tells you which one costs less in total.

On the renting side you enter your monthly rent and an expected annual rent increase. On the buying side you provide the home price, down payment percentage, mortgage rate, loan term, annual property tax rate, and annual maintenance rate. You then set the number of years you expect to stay, which is the pivot that often decides the whole comparison.

The result is a total cost for each path and the dollar amount by which the cheaper option wins. By crediting the buyer for the loan principal they pay down, the tool captures the equity-building side of ownership that a naive payment-versus-rent comparison completely misses.

How the Rent vs Buy Calculator works

Renting cost is the sum of each year's rent, with rent growing by your annual increase percentage each year. Year one is your base monthly rent times 12, year two is that figure grown by the increase rate, and so on across your horizon, so a compounding rent hike is fully reflected.

Buying cost starts with the down payment, then adds the mortgage payments made over your horizon, plus total property taxes and maintenance (each computed as its annual percentage of the home price times the years you stay). From that sum it subtracts the loan principal you paid down over the period, treating that principal as recovered equity you keep when you sell.

The mortgage payment itself is amortized with the standard formula on the loan amount (home price minus down payment). The tool then walks month by month through the amortization schedule for your horizon to separate interest from principal, so the equity credit is precise. Importantly, it ignores home price appreciation, closing and transaction costs, tax deductions, and the investment return you could earn on the down payment, so it is a deliberately simplified comparison.

Worked example

Using the defaults: rent of $2,000 a month rising 3% a year, versus a $400,000 home with 20% down, a 6.5% mortgage over 30 years, 1.1% property tax, 1% maintenance, over a 7-year stay. Total renting cost over seven years comes to about $183,899 as the rent compounds upward each year.

On the buying side, the $80,000 down payment finances a $320,000 loan with a monthly payment of $2,022.62. Over 84 months you pay about $169,900 in mortgage payments, of which roughly $30,668 goes to principal (your recovered equity). Property taxes total $30,800 and maintenance $28,000. Total buying cost is $80,000 + $169,900 + $30,800 + $28,000 - $30,668 = about $278,032.

So over this seven-year horizon, renting is cheaper by roughly $94,133. That result flips as the horizon lengthens: the longer you stay, the more the fixed costs of buying spread out and the more principal you build, while rent keeps compounding, which is why the years-staying input so often changes the answer.

Tips & common mistakes

Pay close attention to your time horizon. Buying almost always loses to renting over a short stay because the transaction and interest-heavy early payments dominate; the longer you plan to stay, the more buying tends to win.
This model excludes home appreciation and the closing costs of buying and selling. If you expect strong appreciation, buying looks better than shown; if you will sell soon, remember agent commissions of 5% to 6% would make buying look worse.
Do not forget the opportunity cost of your down payment. The $80,000 tied up in a house could have been invested; this tool does not credit that return to the renting side, so a disciplined investing renter may do better than the numbers suggest.
Use a realistic maintenance rate. Homeowners routinely underestimate upkeep; 1% of the home's value per year is a common baseline, and older homes can run higher.
Match the rent increase rate to your local market. In areas with rapid rent growth, the renting path gets more expensive faster, tilting the comparison toward buying over long horizons.

Rent vs Buy Calculator: frequently asked questions

Why does buying look expensive over a short time horizon?

Because the costs of ownership are front-loaded. In the early years of a mortgage almost all of your payment is interest rather than principal, so you build little equity, while property taxes, maintenance, and the down payment are all working against you. Over a short stay there is not enough time for equity buildup to offset those costs, so renting frequently wins. Extending the years-staying input usually reverses the result.

Does this calculator include home price appreciation?

No, and that is a deliberate simplification. The tool credits you for the loan principal you pay down but assumes the home's value stays flat. If you expect the home to appreciate, buying would look better than the result shown, since you would keep that gain on top of your equity. Conversely, in a flat or falling market the comparison here is realistic or even generous to buying.

Are closing costs and selling costs factored in?

No. The model excludes the closing costs of purchasing and the agent commissions and transfer taxes of selling, which together can total 7% to 9% of the home's value across a buy-and-sell cycle. Because those costs fall on the buyer, including them would make buying look worse, especially over short horizons. Keep that in mind when the comparison is close.

How is the equity credit calculated?

The tool amortizes your mortgage month by month over your horizon to determine exactly how much of your payments went to principal rather than interest. That principal is your equity: money you get back when you sell (ignoring price changes). It is subtracted from your total buying cost, which is why buying's net cost is lower than the raw sum of payments plus taxes plus maintenance.

Should I add the investment return on my down payment somewhere?

This tool does not, and it is a real factor. A renter who invests the $80,000 they did not put down could earn substantial returns over seven years, which effectively lowers the true cost of renting. If you are a disciplined investor, mentally add that potential gain to the buying side's disadvantage; if the down payment would otherwise sit idle, the omission matters less.

Rent vs Buy Calculator