How to Use This Rent vs Buy Calculator
- Enter the home price you would realistically pay in your area.
- Set your down payment percentage. 20% avoids private mortgage insurance; enter what you could actually pay.
- Enter the mortgage interest rate. Use a quote you have received or a current 30-year rate; the tool assumes a 30-year loan.
- Enter your monthly rent for a home similar to the one you would buy.
- Set the annual rent increase. Check your lease history or local listings for a realistic figure.
- Choose your planned stay. This is the most important input — the longer you stay, the more buying tends to win.
Results update instantly, with total costs for each option and a year-by-year chart.
Worked Example
Say you compare a $450,000 home with 20% down ($90,000) at an example 6.5% rate on a 30-year loan, against $2,800 monthly rent rising 3% yearly, over a 10-year stay. All figures are illustrations, not quotes.
The $360,000 loan works out to roughly $2,275 per month in principal and interest at that example rate. The calculator adds about 1.5% of the home's value per year (roughly $560 per month) for taxes, insurance, and maintenance — about $2,840 total, almost identical to the starting rent.
The difference shows up over time: the mortgage payment stays flat while rent climbs past $3,650 by year 10. Renting looks cheaper early because of the down payment, but the gap narrows every year. A higher rate, smaller down payment, or slower rent growth can flip the answer — run your own numbers.
How to Read Your Results
What the totals include
Buying counts your down payment, principal and interest, and estimated taxes, insurance, and maintenance. Renting counts rent plus yearly increases. Both are cash-out-of-pocket totals over your stay.
What the totals leave out
The tool does not model equity, appreciation, selling costs, tax deductions, or investing the down payment instead. Since buying builds equity, a close "Renting Wins" result can still favor buying.
Treat it as a starting point
A small margin can flip with a rate drop, a rent hike, or moving a year earlier. A wide margin across several scenarios is a much stronger signal.
The break-even point matters
Watch where the lines cross on the chart. If they cross before your stay ends, buying likely comes out ahead by the time you move. If they never cross, renting is the cheaper cash choice for that period.
Mistakes to Avoid
Comparing rent to the mortgage payment alone
Taxes, insurance, repairs, and HOA dues can add hundreds a month, so compare rent to the full ownership cost this calculator estimates.
Ignoring your real timeline
Buying and later selling carries large one-time costs. If a job change could move you within a few years, be honest about it — a short stay is the most common reason buying loses.
Assuming rent never rises
Leaving rent increases at 0% makes renting look artificially cheap. Even modest yearly increases compound; over a decade they can add up to a full extra year of rent or more.
Stretching to a house you cannot afford
A win for buying only holds if the payment fits your budget. Check it against your income with our home affordability calculator first.
Professional User Guide
1. Assessing Your Timeline
The "Planned Stay" is often the deciding factor in the rent vs. buy debate. Buying has high upfront costs (down payment and closing fees), which take years of home appreciation and stable mortgage payments to offset compared to renting.
2. Factoring in Hidden Costs
This calculator estimates "Other" buying costs, such as property taxes, insurance, and maintenance, at approximately 1.5% of the home's value annually. Renting may seem more expensive month-to-month, but it eliminates these additional homeowner responsibilities.
Frequently Asked Questions
Is it better to rent or buy a home?
It depends on your stay length and local market conditions. Buying builds equity but has high upfront costs. Renting offers flexibility and lower maintenance responsibilities.
What is the 5-year rule for buying a home?
The 5-year rule suggests that if you plan to stay in a home for less than five years, renting is usually more cost-effective due to the high costs of buying and selling.
Does this calculator account for home equity?
No. It compares cash paid out for each option. Part of every mortgage payment builds equity you can recover when you sell, so buying can still make sense even when its total cash cost is somewhat higher.
What costs of owning a home do renters not pay?
Property taxes, homeowners insurance, maintenance and repairs, and often HOA dues. This calculator estimates them at about 1.5% of the home's value per year; adjust if your area runs higher or lower.
Should I buy if my rent is higher than a mortgage payment?
Not automatically. Compare rent against the full cost of owning — payment plus taxes, insurance, and upkeep — and factor in your stay. If you may move within a few years, buying and selling costs can outweigh the monthly savings.