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 outflows are the down payment, 30-year fixed mortgage payments, property tax (1% of price per year) and maintenance (1% of price per year). Equity at the end is the appreciated home value minus the remaining loan balance. The opportunity cost is a 7% annual return forgone on the down payment, added to the buying side. Renting costs are the rent paid, rising by the annual increase.
- 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 and try several appreciation rates, since the result depends heavily on them.
Frequently asked questions
How does this tool compare the two options?
This tool uses net buying cost = down payment + 12 × monthly payment × years + property tax + maintenance − equity + opportunity cost, and net renting cost = total rent paid. Whichever is smaller is reported as the better option; an exact tie reads as renting. Equity is the end-of-period home value minus the loan balance still owed.
What loan does the tool assume?
A fixed-rate 30-year (360-payment) loan on price minus the down payment, with the standard amortisation formula. A mortgage rate of 0 divides the loan by 360. The balance owed at the end is worked out after the number of payments made in the years you pick, capped at 360, so comparing more than 30 years does not add payments after the loan is gone.
What are the property tax and maintenance assumptions?
Both are fixed at 1% of the original purchase price per year and are the figures built into this tool, not inputs. They do not grow with the home’s value or with inflation. Home insurance, HOA fees and mortgage insurance are not included at all.
What is the opportunity cost, and how is it set?
It is the investment growth forgone by tying up the down payment in the home: down payment × (1.07^years − 1). The 7% annual return is built into the code and cannot be changed, is not reduced by tax, and is added to the buying side. The monthly difference between mortgage and rent is not invested on either side.
How is rent modelled?
Rent is paid for twelve months at the current level, then raised by the annual increase you enter, compounding each year. The total is the sum over the years you choose. No move-in costs, deposits or renters insurance are included.
What are the biggest costs this model leaves out?
Closing costs when buying, agent and closing costs when selling, moving costs, mortgage interest tax relief or any other tax effect, PMI, and refinancing. Home value at the end is shown before any selling costs. Those omissions generally favour buying, especially over short horizons.
What does the “Total buying cost” line show?
It is the sum of the down payment, all mortgage payments over the years chosen, and the 1% property tax and 1% maintenance figures, before equity or opportunity cost are applied. On the defaults it is $211,187 over five years. The net buying cost is lower because the equity in the home is subtracted.
Does this tell me whether I should buy?
No. It shows which of two simplified cost totals is smaller for the inputs you typed. The answer moves with appreciation and rent growth, which nobody knows in advance, so try several values, and treat the output as one input to a decision.
Rent versus buy: how the two cost totals are built
The buying side of the comparison
For buying, the model takes the down payment, adds twelve monthly mortgage payments for each year, and adds property tax and maintenance at 1% of the purchase price each per year. It then subtracts equity, meaning the home value after compounding the appreciation rate minus the loan balance still owed, and adds the opportunity cost of the cash tied up at a built-in 7% annual return. With the defaults ($350,000 home, 20% down, 6.5% rate, 3% appreciation, five years) the payment is $1,770 a month, total buying outflow is $211,187, the home is worth $405,746 and net buying cost is $95,731.
The renting side, and a five-year result
Renting is simply the rent paid, starting at the current figure and rising by the annual increase each year. At $1,800 a month with a 3% increase, five years of rent total $114,677, which is the net renting cost. On these inputs the tool reports buying as the better option, with a gap of roughly $19,000 between the two totals. The opportunity cost of the $70,000 down payment is $28,179 and is already inside the buying figure, so it is not added to rent.
Worked example: changing the horizon and the appreciation
Time horizon shifts the result because equity builds and rent keeps compounding. Over two years the tool shows net buying cost of $38,834 against $43,848 in rent; over ten years the totals are $187,078 and $247,620. A weak housing market reverses the picture: with 15 years and 1% appreciation the home is worth $406,339, net buying cost is $413,521, rent is $401,737, and the tool reports renting as the better option. Remember that no closing or selling costs are modelled, so the short horizon flatters buying.
| Years | Appreciation | Home value at end | Net buying cost | Net renting cost | Result |
|---|---|---|---|---|---|
| 2 | 3% | $371,315 | $38,834 | $43,848 | Buying |
| 5 | 3% | $405,746 | $95,731 | $114,677 | Buying |
| 10 | 3% | $470,371 | $187,078 | $247,620 | Buying |
| 15 | 1% | $406,339 | $413,521 | $401,737 | Renting |
Assumptions that carry the most weight
Three inputs drive the comparison more than the others: the appreciation rate, the rent increase and the built-in 7% return that sets the opportunity cost. The first two are yours to vary; the 7% cannot be changed in the tool. Property tax and maintenance are both 1% of the original price and stay flat, so a home in a high-tax area or an older house will cost more to hold than the model shows.
Using the result sensibly
Run the comparison with at least a pessimistic, a middle and an optimistic appreciation rate, and with a horizon you can realistically commit to. Then add the costs the tool leaves out, such as closing and selling costs, to the buying side by hand. A narrow gap between the two totals means the answer depends more on the missing items than on the model.
Learn more from an authoritative source:
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Down Payment Savings Calculator
Calculate how long it will take to save for a home down payment and what monthly savings you need.
LTV Calculator (Loan-to-Value)
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 →