Rent vs. Buy Calculator
Compare the true long-term cost of renting vs buying a home over your time horizon.
| Year | Buy: Total Cost | Rent: Total Cost | Buy Net Worth | Rent Net Worth | Difference |
|---|
Compare the true long-term cost of renting versus buying a home over your expected time horizon, factoring in appreciation, opportunity cost, and all ownership expenses.
How Rent vs. Buy Calculator Works
The buying scenario simulates your mortgage amortizing month by month, adds property tax, insurance, maintenance, and HOA fees, and grows the home's value at your assumed appreciation rate — your buy-side "net worth" at any point is the home's current value minus your remaining loan balance (your equity).
The renting scenario grows your rent payment annually at your assumed rent increase rate, and — critically — assumes the money you would have spent on a down payment is instead invested at your assumed investment return, compounding monthly. This "opportunity cost of the down payment" is often the most overlooked part of a fair rent-vs-buy comparison.
The verdict compares your projected net worth under each scenario at your chosen time horizon: if buying leaves you meaningfully ahead, it recommends buying; if renting (plus investing the difference) leaves you ahead, it recommends renting; and if the two are within about $5,000, it calls the outcome roughly a tie.
See It In Action
Who Uses Rent vs. Buy Calculator and Why
- Deciding whether renting or buying leaves you further ahead financially over a specific time horizon, like 5 or 10 years.
- Seeing the break-even year at which buying\'s equity is projected to overtake renting-and-investing\'s net worth.
- Checking how sensitive the rent-vs-buy decision is to your assumed home appreciation rate.
- Understanding how much the opportunity cost of tying up a down payment actually affects the comparison, rather than just comparing monthly payments.
Mistakes to Avoid
- Comparing renting and buying by monthly payment alone — this calculator\'s core insight is that the down payment money not spent on a home is assumed to be invested instead, and that opportunity cost is often the most overlooked part of a fair comparison.
- Assuming a flat home appreciation rate reflects your actual market — the result is very sensitive to this assumption; a higher appreciation rate favors buying substantially, while a flat or low one tends to favor renting and investing instead.
- Expecting this calculator to factor in tax benefits of homeownership — it focuses on cash flow, appreciation, and opportunity cost of capital, and doesn\'t model mortgage interest deductions or other tax effects that could shift the comparison somewhat toward buying for some filers.
Tips for Best Results
- Run the comparison at a few different appreciation rate assumptions (conservative and optimistic) to see how much the verdict actually depends on that one number, rather than trusting a single scenario.
- Pay attention to the break-even year, not just the final verdict — if you\'re not sure how long you\'ll stay in the home, knowing when buying is projected to pull ahead matters more than the result at one specific time horizon.
Fixing Common Problems
Renting comes out ahead even though buying builds home equity. — This happens because the calculator credits the renter with investment growth on the money not spent on a down payment and any monthly cost difference — if the home\'s appreciation and equity buildup don\'t outpace what that invested money would have earned, renting can come out ahead financially even though buying builds direct home equity.
Terms Explained
Opportunity cost of the down payment: The investment growth the renting scenario assumes on the money that would otherwise have gone toward a down payment.
Break-even year: The first year in the projection where buying\'s net worth (home equity) overtakes renting\'s net worth (invested savings).