Rent vs Buy Calculator
Rent vs buy calculator: compare the true cost of buying a home with renting over the years you plan to stay.
Editorial review: Farrow (pseudonym; identity and professional credentials are not disclosed). This page is for educational purposes, not professional advice.
Your inputs
Results update as you type. Nothing you enter leaves your device.
Results
- Net cost of buying
- $146,152
- Net cost of renting
- $164,836
- Monthly mortgage (P&I)
- $1,980.71
Example with the starting values
These results use the calculator's initial inputs. Change the values above to calculate your own estimate.
Inputs
- Home price
- 400000 $
- Down payment
- 20 %
- Mortgage rate
- 6.3 %
- Years you'll stay
- 7
- Monthly rent
- 2200 $
- Rent increase
- 3 %/yr
- Home appreciation
- 3.5 %/yr
- Property tax
- 1 %/yr
- Upkeep and insurance
- 1.5 %/yr
- Investment return
- 5 %/yr
Results
- Buying saves over 7 years
- $18,683
- Net cost of buying
- $146,152
- Net cost of renting
- $164,836
- Monthly mortgage (P&I)
- $1,980.71
How does the Rent vs Buy Calculator work?
A rent vs buy comparison is a side-by-side of what you would really spend to own a home versus rent one over the same period.
Buying cost = down payment + 3% closing costs + mortgage payments + property tax + upkeep and insurance, minus the equity you keep after selling (sale price less 6% selling costs and the remaining loan).
Renting cost = total rent (rising each year) minus what the down payment and closing costs would have earned if invested instead.
For example, buying a $400,000 home with 20% down at 6.3% and staying 7 years costs about $146,152 net, versus $164,836 net to rent at $2,200 a month over the same period, a savings of about $18,683 from buying.
Sources
Frequently asked questions
What is the break-even horizon?
Buying usually wins only after several years, because closing and selling costs are front-loaded. Change the years to see where the answer flips.
Is it better to rent or buy a house right now?
It depends on how long you will stay, local rents and prices, and your mortgage rate. Buying tends to pay off only if you stay at least five years or so.
What closing costs should I expect when buying a home?
Buyers typically pay about 2% to 5% of the price in closing costs, and sellers often pay around 6% in agent and transfer costs. This calculator uses 3% and 6%.
Do I pay tax when I sell my home?
Usually not. If you owned and lived in the home for 2 of the last 5 years, up to $250,000 of gain ($500,000 married filing jointly) is tax-free.