Rent vs Buy Calculator

Renting and buying are compared fairly by starting both with the same cash. The buyer spends it on the down payment and buying costs. The renter pays a deposit and invests the rest. Each month, whichever path costs less invests the difference. At the end of each year we ask: if you left now, what would you have? The buyer sells the home, pays selling costs and clears the mortgage. The renter has their investments and gets the deposit back. The bigger pot wins.

The formula

cash to buy = down payment + buying costs; renter invests cash to buy − deposit − agent fee
owning a month = mortgage payment + PMI + property tax + maintenance + insurance + HOA + other − tax relief
renting a month = rent + renter's insurance
each month, the cheaper path invests (dearer cost − cheaper cost); savings grow at (1 + return)^(1/12) − 1 a month
if you buy, you'd have = home value − selling costs − loan left − tax on profit + your savings
if you rent, you'd have = your savings + deposit back
buying ahead by = what you'd have if you buy − what you'd have if you rent
net cost of each = everything you paid − what you get back − what your savings earned

Worked example

A 400,000 home with 20% down (80,000) and buying costs of 3% (12,000) needs 92,000 in cash. The renter pays a deposit of one month's rent (2,000) and invests the other 90,000 at 5% a year.

The 320,000 mortgage at 6.5% over 30 years costs 2,022.62 a month. Add property tax of 1% (4,000 a year, 333.33 a month), maintenance of 1% (333.33 a month) and insurance of 1,200 a year (100 a month), and owning costs 2,789.28 in the first month. Renting costs 2,000 + 15 of renter's insurance = 2,015, so the renter invests the 774.28 difference every month.

After 10 years, with home prices up 3% a year, the home is worth 400,000 × 1.03¹⁰ = 537,567 (to the nearest whole unit). Selling costs of 5% take 26,878 and 271,284 of the loan is still owed, so the buyer walks away with 537,567 − 26,878 − 271,284 = 239,405. Rent has gone up 3% a year (to 2,609.55 a month in year 10), but owning still cost more every month (3,017 against 2,628 on average in year 10), so the renter has invested the difference all along: their savings have grown to 240,212, plus the 2,000 deposit back makes 242,212. Renting is ahead by 242,212 − 239,405 = 2,807.

Stay one more year and buying wins by 3,175, so the break-even is year 11. Over 10 years, a rent of about 2,016 a month makes it a draw: pay less than that and renting wins, more and buying wins.

What moves the answer most

• How long you stay. Buying and selling costs (often 6 to 10% of the price together) are paid once, so they hurt most over a short stay.
• Home price growth vs investment return. The buyer's money is in the home; the renter's is invested. Whichever grows faster helps that path.
• Rent vs price. Divide the price by a year's rent. In the example, 400,000 ÷ 24,000 is about 17. A high number (over 20) tends to favour renting; a low one (under 15) tends to favour buying.
• The mortgage rate. In the early years most of the payment is interest, which, like rent, is money you don't get back.

This is a model, not a forecast: home prices, rents and returns rarely move in straight lines. Property tax and maintenance are worked out on the home's value at the start of each year; rent rises once a year; insurance, HOA, other costs and a property tax entered as an amount rise with inflation. Taxes, fees and mortgage insurance vary by country, region and lender, so use your own numbers. It doesn't count the non-money sides, like the freedom to move when renting or being able to change your own home. Checked on 10 October 2026.