Rent vs. Buy Calculator
Compare the financial impact of renting versus buying a home.
Examples
Renting at $1,800/Month vs. Buying a $350,000 Home
High-Rent City: Renting at $3,200 vs. Buying a $700,000 Condo
Frequently Asked Questions
Does this account for home appreciation?
What about the tax benefits of homeownership?
What is the breakeven year?
Quick Tips
Double check your inputs. Ensure units match (e.g., inches vs cm).
How to Use This Calculator
Enter the home purchase details and your current rent. The calculator compares the net worth of buying (home equity minus costs) vs renting (investment portfolio from investing the down payment and monthly savings) over your chosen time horizon.
Understanding the Formula
Buy Net Worth = Home Value (with 3% annual appreciation) - Remaining Loan Balance. Rent Net Worth = Down Payment invested + Monthly Savings invested, both growing at your expected return rate. Total costs include mortgage payments, property tax, maintenance for buying, and monthly rent (with annual increases) for renting.
Examples
Renting at $1,800/Month vs. Buying a $350,000 Home
You compare renting at $1,800/month (with 3% annual increases) to buying a $350,000 home with 10% down, a 6.5% mortgage rate, $4,200/year property tax, and $1,200/year insurance. Over 7 years, buying builds about $78,000 in equity while your total housing costs are roughly $2,450/month. Renting costs less monthly but builds no equity, and your invested savings grow to about $45,000 assuming a 7% return.
High-Rent City: Renting at $3,200 vs. Buying a $700,000 Condo
In a high-cost city, you rent for $3,200/month or buy a $700,000 condo with 20% down ($140,000). The mortgage at 6.75% for 30 years costs $3,635/month plus $580 in taxes, insurance, and HOA fees. Over 5 years, the higher buying costs mean renting and investing the difference at 8% leaves you ahead by roughly $35,000 in net worth.
Frequently Asked Questions
Does this account for home appreciation?
Yes. The calculator assumes 3% annual home appreciation, which is close to the long-term national average.
What about the tax benefits of homeownership?
This simplified comparison does not include mortgage interest deductions or capital gains exclusions. These benefits may make buying more favorable for some taxpayers.
What is the breakeven year?
The breakeven year is when the net worth from buying surpasses the net worth from renting. Before this point, renting may be financially better.