🏘️ Rent vs. Buy Calculator
Is it better to rent or buy? Compare the net cost of each over the years you expect to stay – including mortgage interest, property tax, upkeep, home appreciation, selling costs and what your down payment could have earned.
Quick answer: For a $400,000 home with 20% down at 6.5% versus $2,200 a month in rent, buying costs $186,155 net over 7 years and renting $202,289 – buying wins by $16,134 and breaks even in year 6.
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Rent vs. Buy Calculator inputs
Result
Buying is cheaper over 7 years
$16,134
Buying breaks even after 6 years
| Net cost of buying (7 years) | $186,155 |
| Net cost of renting (7 years) | $202,289 |
| Break-even year | Year 6 |
- Down payment + closing costs
- $92,000
- Mortgage payment (P&I)
- $2,022.62
- Home equity after selling in year 7
- $189,045
Year by year
| Year | Home value | Loan balance | Equity if sold | Owning costs | Rent paid | Net cost – buy | Net cost – rent |
|---|---|---|---|---|---|---|---|
| 1 | $414,000 | $316,423 | $72,737 | $34,171 | $26,400 | $58,035 | $26,400 |
| 2 | $428,490 | $312,607 | $90,174 | $34,465 | $27,192 | $79,893 | $53,592 |
| 3 | $443,487 | $308,535 | $108,343 | $34,770 | $28,008 | $101,565 | $81,600 |
| 4 | $459,009 | $304,191 | $127,278 | $35,085 | $28,848 | $123,040 | $110,448 |
| 5 | $475,075 | $299,555 | $147,015 | $35,411 | $29,713 | $144,305 | $140,161 |
| 6 | $491,702 | $294,609 | $167,591 | $35,748 | $30,605 | $165,348 | $170,766 |
| 7 | $508,912 | $289,332 | $189,045 | $36,097 | $31,523 | $186,155 | $202,289 |
Net cost of buying = down payment + closing costs + mortgage, tax, maintenance and insurance paid + investment growth given up on the upfront cash − equity you keep after selling costs and paying off the loan. Net cost of renting = rent paid. The break-even year is highlighted.
How to use the rent vs. buy calculator
Enter the price of the home you would buy, your down payment, mortgage rate and term, the rent for a comparable home and how many years you expect to stay. Open the ownership costs section to adjust property tax, maintenance, insurance, price growth, rent increases, the return you could earn on your down payment, and buying and selling costs.
The formula
Net cost of buying = Upfront cash + Owning costs + Lost investment growth − Equity after sale
Upfront cash is the down payment plus closing costs. Owning costs are mortgage payments, property tax, maintenance and insurance. Equity after sale is the home's value minus selling costs and the remaining loan. The net cost of renting is simply the rent paid, rising each year. The break-even year is the first year buying costs less.
Worked example
A $400,000 home with 20% down at 6.5% for 30 years has a principal and interest payment of $2,022.62. With 1.1% property tax, 1% maintenance, $1,500 insurance, 3.5% price growth, 3% buying costs, 6% selling costs and a 5% return on the $92,000 upfront, owning costs $186,155 net over 7 years. Renting at $2,200 rising 3% a year costs $202,289, so buying wins by $16,134 and breaks even in year 6.
What tips the balance
| Favours buying | Favours renting |
|---|---|
| Staying many years | Moving within a few years |
| Fast home price growth | Flat or falling prices |
| Low mortgage rates | High rates and property taxes |
| Rents rising quickly | High investment returns elsewhere |
Estimates for educational purposes, not financial advice.
Frequently asked questions
How do you calculate rent vs buy?
Add up everything buying costs – down payment, closing costs, mortgage payments, tax, insurance and maintenance, plus what the upfront cash would have earned invested – then subtract the equity you would get back by selling. Compare that with the total rent over the same period.
What is the break-even point for buying a home?
The first year in which the net cost of owning drops below the cost of renting. Buying and selling costs mean it is typically 3–7 years; if you might move sooner, renting is usually cheaper.
Is rent money wasted?
No. Rent buys housing with no maintenance bills, property tax or selling costs. Much of an owner's early mortgage payment is interest, which is just as "lost" as rent – the comparison above shows which costs less overall.
What assumptions matter most?
How long you stay, home price growth and the mortgage rate move the answer most. Try a lower appreciation rate or a shorter stay to stress-test the result.