About the Rent vs Buy Calculator
Buying builds equity but comes with upfront costs, ongoing ownership expenses, and selling costs. Renting avoids those but builds no equity, while the cash you would have used for a down payment can be invested instead.
This calculator presents the numbers side by side and does not declare either option better — the answer depends heavily on how long you stay and on the assumptions you choose.
How It Works
Renting cost is all rent paid over the period, with rent increasing once a year.
Buying cost is the down payment and closing costs, plus mortgage payments, property tax, insurance, maintenance and HOA dues, minus what you would keep after selling: the home's value minus the loan balance minus selling costs.
Opportunity cost is the growth the upfront cash (down payment + closing costs) could have earned at the investment return you enter. It is added to the buying cost.
Formula
Example
Rent is $2,200 a month rising 3% a year. The alternative is a $400,000 home with $80,000 down at 6.5% for 30 years, 1.1% property tax, $1,500 insurance, 1% maintenance, 3% appreciation, 3% closing and 6% selling costs, and a 6% investment return, over 10 years.
Inputs
- Period
- 10 years
- Rent
- $2,200/mo
- Home price
- $400,000
Results
- Renting cost
- $302,646.41
- Buying cost
- $284,739.74
- Difference
- −$17,906.67
- Home equity at end
- $266,282.95
With these assumptions, buying is estimated to cost about $17,900 less over 10 years. Over a shorter stay, or with lower appreciation, the result can reverse — try changing the period.
Assumptions & Limitations
- All assumptions are inputs shown in the results panel: rent increase, rate, taxes, insurance, maintenance, HOA, appreciation, investment return, and transaction costs.
- Insurance and HOA stay constant; property tax and maintenance scale with the home's value.
- Not included: income-tax effects (such as the mortgage interest deduction), PMI, renters insurance, moving costs, and investing monthly cost differences.
- The home is sold at the end of the period so equity can be compared in cash terms.
Understanding Your Results
- Difference: Buying cost minus renting cost. A negative number means buying is estimated to cost less over the period.
- Estimated Home Equity: Home value minus the remaining loan balance at the end (before selling costs).
- Opportunity Cost: Estimated investment growth given up by putting cash into the home.