Rent vs Buy Calculator
Compare the true financial cost of renting vs buying a home. See net worth projections, break-even year, and monthly cost breakdowns side-by-side.
Renting
Buying
$70,000
$3,850 / yr
$3,500 / yr
$10,500
Assumptions
Annual return on invested savings
After 10 years
Renting wins by $45,994
Renting and investing the difference builds more wealth in this scenario
Comparison at Year 10
Renting
Renter Net Worth
$255,474
Investment Balance
$255,474
Total Rent Paid
$249,420
Monthly Cost (Year 1)
$1,815.00
Buying
Buyer Net Worth
$209,479
Home Value
$470,371
Home Equity
$232,998
Monthly Cost (Year 1)
$2,507.29
Monthly Cost Comparison (Year 1)
Net Worth Over Time
Year-by-Year Breakdown
View the full 10-year comparison showing net worth, home value, and equity for each year.
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How to Use the Rent vs Buy Calculator
The rent vs buy decision is one of the biggest financial choices you will make. This calculator goes beyond simple monthly payment comparisons to show you the full picture: what your net worth looks like under each scenario over 5, 10, 20, or even 30 years. It accounts for home appreciation, investment returns on savings, rising rent, maintenance costs, and the opportunity cost of your down payment.
Setting up the renting scenario: Enter your current monthly rent and the annual rate you expect rent to increase (national average is about 3%). Include your renter's insurance cost. The calculator assumes you invest your would-be down payment and closing costs, plus any monthly savings if renting is cheaper, at the investment return rate you specify.
Setting up the buying scenario: Enter the home price, your down payment percentage, mortgage interest rate, and loan term. Then fill in the ongoing costs that homeowners face: property tax rate, annual insurance, and maintenance. The maintenance rate of 1% per year is a common guideline — a $350,000 home costs roughly $3,500 per year to maintain. Finally, set your expected home appreciation rate.
Reading the results: The verdict banner immediately tells you which option wins and by how much. The side-by-side comparison shows detailed net worth components for each scenario. The net worth chart visualizes both paths over time — where the bars cross is your break-even point. Hover over any year to see exact numbers. The year-by-year table provides full detail including home value growth and equity accumulation.
Experimenting with scenarios: The real power of this calculator is comparing “what if” scenarios. Try changing the time horizon to see how the decision flips at different durations. Adjust the appreciation rate to model optimistic and pessimistic housing markets. Change the investment return to see how stock market assumptions affect the renting case. Use the share button to save different scenarios and compare them side by side by opening multiple browser tabs.
Frequently Asked Questions
How does this rent vs buy calculator work?
This calculator compares the financial outcome of renting vs buying over your chosen time horizon. For renting, it assumes you invest the money you would have spent on a down payment, closing costs, and the monthly cost difference (if renting is cheaper) into the stock market. For buying, it tracks your growing home equity through mortgage payments and appreciation. At the end, it compares your net worth under each scenario — investment balance for renting vs home equity minus selling costs for buying.
What is the break-even point for buying a home?
The break-even point is the year where buying becomes financially better than renting. Before this point, the renter who invests their savings has a higher net worth. After it, the homeowner comes out ahead due to equity buildup and appreciation outpacing investment returns. Typical break-even periods range from 3 to 7 years, depending on home prices, interest rates, rent levels, and market appreciation. If you plan to move before the break-even year, renting is usually the better financial choice.
Why does the calculator assume renters invest the difference?
A fair comparison must account for opportunity cost. The down payment and closing costs a buyer spends could have been invested in the stock market. Similarly, if renting is cheaper month-to-month, the renter could invest those savings. Without this assumption, the comparison would falsely favor buying because it would ignore the growth potential of the renter's savings. The default 7% investment return reflects the long-term historical average of the S&P 500 after inflation.
What costs does the calculator include for buying?
The buying scenario includes: down payment, closing costs (typically 2-5% of home price), monthly mortgage principal and interest, property taxes, homeowner's insurance, and ongoing maintenance (typically 1% of home value per year). When calculating the buyer's final net worth, it also subtracts estimated selling costs of 5% of the home value, since you'd pay agent commissions and closing costs when selling. The calculator does not include PMI, HOA fees, or tax deductions, which could shift the result in either direction.
What home appreciation rate should I use?
The national average home appreciation rate has historically been about 3-4% per year. However, this varies dramatically by market — some cities have seen 6-8% appreciation while others have stagnated or declined. For a conservative estimate, use 3%. For a hot market, you might use 5-6%, but be cautious about projecting recent boom rates into the future. You can also set a negative appreciation rate to model a declining market and see how that affects the rent vs buy decision.
When does it make more sense to rent?
Renting often wins when: you plan to stay less than 5 years (not enough time to recoup closing costs and build equity), you live in a market where home prices are very high relative to rents (price-to-rent ratio above 20), interest rates are high (increasing the cost of borrowing), you can invest the savings at good returns, or you value flexibility and mobility. The calculator helps you test these scenarios with your actual numbers rather than rules of thumb.