Rent vs Buy Calculator
Whether buying a home or renting costs less over the years you plan to stay, counting the return your down payment could have earned.
Result…
How it's calculated
Buying = down payment + buying costs + mortgage payments + tax and upkeep + lost return − (sale price − selling costs − balance owed) Lost return = cash put in × ((1 + return)^years − 1) Renting = Σ 12 × rent × (1 + rent increase)^(year − 1)
Compares what each choice really costs by the time you move. Buying costs the cash you put in, the payments and running costs, and the return that cash could have earned, minus what you get back when you sell. Renting costs the rent. The longer you stay, the more the buying costs are spread out, so buying often wins only after some years.
Your numbers, step by step
About the Rent vs Buy calculator
This rent vs buy calculator compares what each choice really costs by the time you move. For buying it adds the down payment, buying costs, mortgage payments, property tax and upkeep, plus the return that cash could have earned if you had invested it. Then it takes away what you get back when you sell, after selling costs and the balance still owed. For renting it adds up the rent, rising each year by the increase you enter. It shows the net cost of each, which one saves money over the years you stay, and the first year buying comes out cheaper, if it does. Every rate is yours to enter, so it works in any country, and the working is shown line by line so you can check each figure. To see what a loan payment alone would be, use the mortgage calculator.
How to use it
- Enter the “Home price”, your “Down payment” as a percentage, the “Mortgage rate” and the “Loan term”.
- Add the “Buying costs”, “Property tax”, “Upkeep and insurance” and “Selling costs” as percentages; enter 0 for any that do not apply.
- Enter the “Home price growth” you expect, which can be negative.
- Enter the “Monthly rent” for a similar home and the “Yearly rent increase”.
- Set the “Return on savings” your cash could earn and the “Years you stay”, then read which choice saves money and from which year buying is cheaper.
Worked example
A 400,000 home with 20% down at 6.5% over 30 years costs 2,022.62 a month. With 3% buying costs, 1.2% property tax, 1.5% upkeep, 3% yearly price growth, 5% selling costs and a 5% return on savings, against 2,000 rent rising 3% a year: over 10 years buying costs 276,977.70 net and renting 275,133.10, so renting saves 1,844.60. Stay 15 years and buying saves 50,011.46; it becomes the cheaper choice from year 11.
Updated
Questions people ask
How do I work out whether renting or buying is cheaper?
Add up everything buying costs over the years you stay, including the return your down payment could have earned, and subtract what you would get from selling. Compare that with the total rent over the same years.
What is the opportunity cost of a down payment?
It is the return you give up by putting cash into a home instead of investing it. The calculator grows the down payment and buying costs at your “Return on savings” rate and counts the growth as a cost of buying.
Why does renting often win over a short stay?
Buying and selling costs are paid once, so over a few years they are spread over little time. Early mortgage payments are also mostly interest, so little equity builds up before you sell.
What is a common mistake when comparing rent and buy?
Comparing the monthly rent with the monthly mortgage payment alone. That leaves out tax, upkeep, buying and selling costs, the lost return on your cash and any change in the home's value.
How reliable is the answer?
It is only as good as your assumptions. Price growth, rent increases and returns are held steady, while real ones vary; tax relief and investing any monthly difference are left out. For a big decision, check the figures with a qualified financial adviser.