How to use the rent vs buy calculator
- Enter the home price, down payment, mortgage rate and term.
- Enter the rent for a comparable home and how fast you expect rent to rise.
- Set your growth assumptions: home value growth, investment return and the time horizon.
- Adjust ownership costs such as property tax, insurance, maintenance, HOA, closing and selling costs under the advanced options.
- Compare net worth year by year, find the break-even year and download the table as CSV.
Worked example
Buying at $400,000 with $80,000 down vs renting at $2,200 a month over 15 years
With a 6.5% 30-year mortgage ($2,022.62 principal and interest), 3% closing costs, 6% selling costs, 1.1% property tax, 1% maintenance, $1,800 insurance, 3% home value growth, 3% rent growth and a 5% investment return, renting leads at first because the renter invests the $92,000 down payment and closing costs. Buying pulls ahead in year 9, and after 15 years the buyer is ahead by about $61,395 ($354,112 against $292,718).
How it works
Buyer net worth = home value − loan balance − selling costs + any invested savings. The renter starts by investing the down payment and buying closing costs. Each month, whichever household has the lower total outlay invests the difference at your chosen return (converted to a monthly rate). Home value grows at your appreciation rate, rent at your rent-growth rate once a year, and insurance and HOA at your cost inflation rate.
Assumptions
- Taxes (including mortgage interest deductions and capital gains) are not modelled.
- Returns and appreciation are constant each year, which real markets are not.
- Maintenance and property tax scale with the home value.
- Both households spend the same total; the one with lower housing costs invests the difference.
Frequently asked questions
Is buying always better in the long run?
No. The answer depends on price-to-rent ratios, how long you stay, appreciation, investment returns and costs. This model makes those trade-offs visible.
Why include selling costs?
Converting home equity to cash usually involves agent commissions and fees. Including them gives a fairer comparison with an investment portfolio.
Which assumption matters most?
Usually home value growth, investment return and how long you stay. Change one at a time and watch how the break-even year moves.
Limitations
- A simplified model for comparison, not a forecast.
- Ignores PMI, renter moving costs and differences in home size or quality.