Rent vs Buy Calculator
Compare the true cost of renting vs buying a home over a set period, including opportunity cost of down payment.
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How to use this calculator
Buying costs include down payment, mortgage payments, property tax (1%), and maintenance (1%). Equity at end is the appreciated home value minus remaining principal. Renting costs include escalating rent plus the investment return foregone on the down payment.
- 1
Enter the home purchase price, your down payment percentage, and the mortgage rate you have been quoted.
- 2
Set expected annual home appreciation and your current monthly rent with its expected annual increase.
- 3
Choose the number of years you plan to compare — the longer the horizon, the more buying typically benefits from equity growth.
Frequently asked questions
What does "opportunity cost of down payment" mean?
If you rent instead of buying, your down payment stays invested. The opportunity cost is the investment return you would earn on that lump sum — this calculator assumes a 7% annual return (historical stock market average). This makes renting more expensive than it first appears.
Why does buying usually win over longer time horizons?
Over longer periods, home equity builds through both appreciation and mortgage paydown, while rent costs continue rising without building any asset. The break-even point varies by market but is typically 5–7 years in most cities.
Are closing costs included?
This calculator uses simplified assumptions (1% property tax, 1% maintenance) and does not include closing costs (typically 2–5% of purchase price), HOA fees, or PMI. For a more precise comparison, add these costs to the home price input.
Rent vs Buy: The True Cost Comparison
Why the Decision Is More Complex Than It Seems
The rent vs buy decision is not simply about monthly payment size. Buying involves upfront costs (down payment, closing costs), ongoing costs (taxes, maintenance, insurance), and potential equity growth. Renting avoids these but means the down payment could be invested elsewhere. A thorough comparison must account for all these factors over your expected time horizon.
The Role of Time Horizon in the Decision
Time horizon is the single most important variable. In most markets, buying becomes more favorable the longer you stay, because equity accumulates and the high upfront costs are spread over more years. Short stays of 1–3 years often favor renting due to the drag of closing costs and the risk of limited appreciation. Most financial planners suggest a minimum 5-year horizon before buying makes clear financial sense.
Learn more from an authoritative source:
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Calculate loan-to-value ratio for a property purchase or refinance, including PMI threshold and equity status.
Home Equity Calculator
Calculate your current home equity, equity gain since purchase, and maximum HELOC or cash-out refinance amount.
Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →