Rent vs Buy Calculator
Compare the total cost of renting against buying over a holding period.
Please note: Estimates only, not investment or legal advice. Property markets, taxes, fees and lending rules vary by location and change over time. Verify figures with a qualified professional before committing.
What the Rent vs Buy Calculator does
The honest rent-versus-buy comparison assumes the renter invests both the down payment and any monthly saving. Buying builds equity and fixes the housing cost, while renting keeps capital liquid and invested. Transaction costs mean short holding periods almost always favour renting.
Formula
Owner's position = Equity after selling costs − Down payment − Mortgage paid − Ownership costsRenter's position = Investment portfolio − Down payment − Total rent paidBreak-even = The first year the owner position exceeds the renter position
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Property price | selected currency | Yes | Accepts 0 or more. |
| Down payment | selected currency | Yes | Accepts 0 or more. |
| Mortgage interest rate | % | Yes | — |
| Loan term | years | Yes | Accepts 1 or more. |
| Current monthly rent | selected currency | Yes | Accepts 0 or more. |
| Annual rent increase | % | Yes | — |
| Annual property appreciation | % | Yes | — |
| Annual ownership costs | selected currency | Optional | Property tax, insurance, maintenance, service charges. Accepts 0 or more. |
| Return on invested savings | % | Yes | What the down payment would earn if invested instead. |
| Years to compare | number | Yes | Accepts 1 or more, up to 50. |
| Selling costs | % | Optional | — |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Currency.
- Enter Property price, Down payment, Mortgage interest rate and Loan term and 5 more.
- Optionally add Annual ownership costs and Selling costs.
- Select Calculate.
Worked example
A $400,000 property, $80,000 down at 6.5%, versus $2,000 rent rising 3%, 3% appreciation, 6% investment return, 7 years.
- Price
- 400000
- Down
- 80000
- Rent
- 2000
- Appreciation
- 3
- Return
- 6
- Years
- 7
Buying typically breaks even around year 5–6 under these assumptions, though the outcome swings heavily with appreciation.
Reading the result
- This is a net-worth comparison, not a cash-flow one. A renter can have more spare cash every single month and still finish behind, because the difference is assumed invested and compounding quietly in the background rather than spent.
- The break-even year and the final "ahead by" figure can tell different stories — buying can be behind for years and then pull decisively ahead, so check the year-by-year table rather than reading the final number as a description of the whole period.
Assumptions and limitations
- Ownership costs (tax, insurance, maintenance) are held at a constant annual figure for the whole comparison — they do not rise with inflation the way rent does, which understates buying's true cost over long periods.
- Only selling costs are modelled on the buy side. Closing costs, loan fees and inspections when purchasing are not included, so a like-for-like comparison needs them added to the price or down payment manually.
Common mistakes
- Treating the result as a prediction rather than a model of this specific assumption set — the notes already flag how sensitive it is to the appreciation and investment-return inputs, so a single run should not be read as a verdict.
- Assuming the comparison describes your outcome even if you would not actually invest the monthly difference — the entire renter side of the calculation depends on that money being invested, not spent.
Frequently asked questions
Why does renting win over short periods?
Purchase and selling costs together often reach 8–10% of the price. Appreciation needs several years to cover that before ownership pulls ahead.
Is buying always better long term?
Usually, but not always. In markets with high prices relative to rents, an invested down payment can outperform property for a very long time.