Rent vs Buy Calculator
Compare the true 5-year cost of renting versus buying, including mortgage, taxes, insurance, maintenance, and appreciation.
Should you keep renting or buy? Enter the home price, mortgage terms, ongoing ownership costs, your current rent, and assumptions for rent inflation and home appreciation. The calculator totals each path over your comparison period, subtracts the equity you build, and declares a winner with the dollar difference.
How to use this calculator
- Enter the home price, down payment percent, mortgage rate, and term.
- Add ownership costs: property tax rate, annual insurance, maintenance percent, and HOA.
- Enter your current monthly rent, expected rent inflation, and home appreciation.
- Choose the comparison period (5 years is standard) and click Calculate.
- Review the verdict, net costs, and equity breakdown to see which path wins.
The formula
Net buying cost = down payment + total monthly housing costs − (appreciated value − remaining balance); compare against total rent paid.
Worked example
A $300,000 home with 20% down at 6% for 30 years has a $1,438.92 P&I payment. Over 5 years with flat rent and prices, buying costs $110,165.73 net (outlay minus $76,669.54 equity gained) versus $132,000 renting — buying wins by $21,834.27.
Frequently Asked Questions
Is renting really throwing money away?
Not necessarily. Rent buys flexibility and avoids maintenance, property taxes, insurance, and the transaction costs of buying and selling. In expensive markets or for short stays, renting often wins mathematically. The real comparison is the net cost of each path over the same period, which is what this calculator computes.
How long should I plan to stay for buying to win?
The longer you stay, the more buying tends to win, because upfront transaction costs spread over more years and equity builds. A common guideline is 5 to 7 years, but it depends heavily on price-to-rent ratios in your market. Run this calculator with your own numbers rather than relying on rules of thumb.
What costs do first-time buyers usually forget?
Beyond principal and interest: property taxes, homeowners insurance, maintenance (budget about 1% of the home value per year), HOA dues, and the 2-5% closing costs on purchase plus roughly 6-10% in transaction costs when you eventually sell. Those add thousands per year that renters never pay.
How does home appreciation affect the math?
Appreciation grows your equity without any extra payment, which strongly favors buying in the comparison. But it is also the most uncertain input — past performance does not guarantee future gains. Try the calculator at 0% appreciation to see your downside case, then at a modest 2-3% for a base case.
What is the 5% rule for rent vs buy?
The 5% rule says the unrecoverable costs of owning — roughly 1% property tax, 1% maintenance, and 3% cost of capital — total about 5% of the home value per year. If annual rent is well below 5% of the purchase price, renting is often cheaper; if above, buying tends to win. This calculator does the fuller version of that comparison.