Rent vs Buy Calculator

See which leaves you better off over the years you'll actually stay, with every cost on the table.

Whether to rent or buy depends less on the monthly payment than on how long you stay and what your money could do instead. Buying comes with costs that renting doesn't, like closing and selling costs, property tax, insurance and upkeep, but it builds equity. Renting keeps your down payment free to invest. Enter a home price and the rent for a similar place, adjust the assumptions to match your area, and the calculator compares what each choice leaves you with, year by year.

How the calculator works

Both sides start with the same cash: the down payment plus the closing costs to buy. The buyer spends it on the home; the renter invests it. Each month, whichever choice costs less in housing has money left over, and that difference is invested at the return you set. When you leave, the buyer sells the home, pays the selling costs and the rest of the loan, and keeps what's left plus their investments. The renter keeps their investments. The calculator compares the two, and the year in which buying first pulls ahead is the break-even point.

Owning costs include the loan payment, property tax and upkeep (both based on the home's value as it grows), home insurance and any HOA fees. Rent rises by the yearly increase you choose.

What it leaves out

To keep the comparison clear, the calculator leaves out income taxes, including the mortgage interest deduction and tax on investment gains, and private mortgage insurance (PMI), which lenders usually charge when the down payment is under 20%. It also assumes steady growth rates, while real prices, rents and returns move up and down. Treat the result as an estimate and check the numbers that matter with a lender or financial adviser.

When renting usually makes more sense

• You expect to move within a few years, before buying's upfront and selling costs are earned back
• Rents in the area are low compared with home prices
• You'd need most of your savings for the down payment and closing costs
• Your job, relationship or city could change soon
• You value flexibility and not handling repairs yourself

When buying usually makes more sense

• You plan to stay long enough to pass the break-even year
• Rents in the area are high compared with home prices
• You can put money down and still keep an emergency fund
• You want stable payments: a fixed-rate loan payment doesn't rise with rents
• You're ready for upkeep, repairs and the time a home takes

Tips for realistic numbers

• Use the rent for a home like the one you'd buy, same size and area
• Check your county's property tax rate rather than a national average
• Get a real insurance quote and the HOA fees for the building
• Set home value growth and savings return conservatively, and try a few values
• Be honest about how long you'll stay: it changes the answer most

Common questions

Is it better to rent or buy a house?

It depends mostly on how long you'll stay, how rents compare with prices in the area, and what your down payment could earn if you invested it instead. Buying has upfront and selling costs that take years to earn back, so short stays usually favor renting and long stays favor buying. The calculator shows the break-even year for your numbers.

How do I calculate rent vs buy?

Compare what each choice leaves you with after the years you'll stay. For buying, add up the loan payments, property tax, insurance, HOA fees and upkeep, then subtract what you'd get from selling after costs and the remaining loan. For renting, add up rent, and credit the renter with investment returns on the down payment and any monthly savings. This calculator does that month by month.

When does buying a home start to pay off?

When the equity you've built, after selling costs, plus your other savings outweighs what you'd have as a renter. That point, the break-even year, depends on prices, rents, rates and growth, and the calculator shows it for the numbers you enter.

What is a good price-to-rent ratio?

The price-to-rent ratio is the home price divided by a year's rent for a similar home. A lower ratio means buying is cheaper relative to renting, a higher one that renting is the better deal. Because it ignores rates, taxes and how long you stay, use it as a first look and the calculator for the full picture.

Does renting waste money?

Rent buys you a place to live, flexibility and no repair bills; the interest, property tax, insurance and upkeep on a home are also money you don't get back. Which costs less depends on the numbers, which is why comparing both over your expected stay is more useful than the rule of thumb.

Does the calculator include taxes and PMI?

No. It leaves out income taxes, the mortgage interest deduction and private mortgage insurance to keep the comparison simple. If your down payment is under 20%, expect PMI on top of the owning costs shown.