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Home planning

Rent vs. buy calculator

Compare renting and buying over the years you expect to stay, including costs, home equity, and invested savings.

Results are educational estimates based on your assumptions, not financial advice or a prediction of home prices or investment returns.

Housing details

Example inputs are illustrations, not quotes or forecasts. Calculations stay in your browser.

Basic inputs
Use 100% for a cash purchase.
Fixed annual mortgage rate; the example is not a lender quote.
Additional assumptions
Costs and growth
Percentage of the original home price in year one.
Percentage of the original home price in year one; an example, not a recommended allowance.
Percentage of the purchase price, separate from the down payment.
Percentage of the projected home value when sold.
Applied to the modeled mortgage balance until it reaches 80% of the original home price. Enter 0 to exclude PMI.
Also applies to renters insurance; increases after each completed year.
Can be negative. The example is not a price forecast.
Effective annual return after any fees you want to reflect, before taxes. The example is not a forecast.
Applies to property tax, insurance, HOA, and maintenance after each completed year.

How to use this comparison

Enter the rent and purchase price for comparable housing, your down payment, mortgage terms, and expected length of stay. Open Additional assumptions to enter local costs and explore different growth assumptions. Defaults are illustrations, not local estimates or forecasts.

How the comparison works

Both options start with cash equal to the down payment plus buying closing costs. The buyer spends it at purchase; the renter invests it. Each month, both options receive a housing budget equal to the higher of their two housing costs. The option with lower costs invests the difference at the end of the month. Investment growth occurs before that month's deposit.

Renting: projected investments = invested starting cash + investment growth + invested monthly savings
Buying: sale proceeds + investments = home value − selling costs − remaining mortgage + invested monthly savings

The mortgage uses the shared fixed-rate payment formula with an amortizing balance. Investment returns are annual effective rates converted to monthly rates. Home value changes monthly at an annual effective rate. Rent and ownership costs increase after each completed year. Buying closing costs reduce starting wealth; selling costs are applied to the home value at each hypothetical sale.

Monthly housing costs include the full mortgage payment, including principal. Principal builds equity through the declining mortgage balance; it is not treated as an unrecoverable expense. The annual cost table shows cash outflows: year 0 includes buying closing costs but excludes the down payment, which becomes equity. Selling costs are reflected in sale proceeds rather than annual housing costs.

Worked example

Suppose a home costs $120,000 with a 20% down payment, a 0% mortgage for 10 years, and no other costs or growth. Compare it with $800 monthly rent for one year. Both options have $24,000 starting cash and $800 monthly housing costs. Renting ends with $24,000 invested; buying ends with $33,600 in home equity after paying down $9,600 of principal. Buying is ahead by $9,600 in this illustration.

Assumptions and limitations

  • Both options can fund the modeled monthly budget and invest all savings. This comparison does not establish affordability or model income.
  • Wealth is shown in future dollars, before investment or home-sale taxes. Tax deductions, tax credits, investment taxes, and tax on home-sale gains are excluded.
  • Investment return includes any fees you choose to reflect. Investment volatility, selling delays, moving costs, utilities, refundable rental deposits, and unusual repairs are excluded.
  • Maintenance and property taxes begin as percentages of the original purchase price. They rise at the entered ownership cost increase, independently of home appreciation. Renters insurance rises with rent.
  • PMI follows the shared model: a monthly charge on the opening loan balance until the balance after scheduled principal reaches 80% of the original purchase price. Appreciation does not cancel PMI. Lender rules may differ.
  • Negative sale proceeds mean additional cash would be needed to settle the sale and mortgage. Negative home appreciation and investment returns are supported.
  • The first break-even is the first month buying wealth matches or exceeds renting wealth within your timeline. The advantage can reverse later; it is not a permanent crossover or a recommendation.

Frequently asked questions

Why does renting include an investment balance?

The renter keeps cash that the buyer uses for the down payment and closing costs. Investing that cash and monthly savings accounts for the alternative use of the money.

What happens when the mortgage is paid off?

Principal, interest, and PMI stop. Property taxes, insurance, HOA, and maintenance continue, and any monthly savings are invested.

Can I model a cash purchase?

Enter a 100% down payment. There is no mortgage payment or PMI, and the renter starts by investing the purchase price plus buying closing costs.

Does the financially ahead option mean I should choose it?

No. Flexibility, location, stability, responsibilities, and risk also matter. This calculator compares only the entered financial assumptions.

Glossary

Net sale proceeds
Projected home value less selling costs and the remaining mortgage.
Opportunity cost
The alternative growth of money used to buy and maintain the home.
Break-even
The first projected month buying wealth matches or exceeds renting wealth.