Rent vs Buy Calculator
Compare the net cost of buying and renting over a stay you choose, with appreciation, rent growth, and a return on the down payment you keep if you rent.
Key concepts
Net cost
Cash you put in over the stay, minus what you could leave with. For buying, that is the sale after the loan and selling costs. For renting, it is the gain on the down payment you kept.
Break-even year
The first year, looking out as far as 40, when buying’s net cost is no higher than renting’s. Your stay can be shorter than that year.
What this tool does
A stay, not a slogan
The page prices a level mortgage payment on the price minus your down payment, adds the tax, insurance, and maintenance you type, and steps the rent up once a year. At the horizon it sells the home. If you rent, the down payment stays invested at the savings rate you type. The PMMS 30-year chip fills the mortgage rate from Freddie Mac’s survey, shows the survey date, and leaves that field editable. Rent growth and appreciation stay as the rates you type.
What a win does not prove
A purchase can cost less here and still fail the income ratios on the affordability calculator. Taxes on a gain, a maintenance spike, and a move you already know is coming sit outside the sliders. Scenario B is a second price, a second rent, or a longer stay.
Rent versus buy formula
Loan = price − down payment Net cost of buying = down payment + owner cash + remaining loan + selling cost − home value Net cost of renting = rent paid − gain on the down payment
Principal and interest use the same fixed-rate level payment as the mortgage payment calculator. The monthly rate is the annual rate divided by 12. Ownership costs stay flat. Rent and home value step once a year. The savings rate compounds monthly. The model does not switch to SAC, and it does not look up a tax bill.
Worked example
Price 120,000, down payment 20,000, a 0% rate, 10 years, no ownership costs, no appreciation, rent of 1,000, a one-year stay, and no selling cost or savings return. The net cost of buying is 0, because the principal comes back as equity. Rent paid is 12,000. Put appreciation, selling costs, and a savings rate back on a real price and the verdict can flip. That is what the sliders are for.
Buying versus renting on this page
Each month
- Buying
- Mortgage plus tax, insurance, and maintenance
- Renting
- Rent that can rise once a year
At the end
- Buying
- Sale proceeds after the loan and selling cost
- Renting
- The down payment you kept, grown at the savings rate
Left out
- Buying
- Tax on the gain, a repair spike, SAC
- Renting
- A lease that ends, a move for work
| Question | Buying | Renting |
|---|---|---|
| Each month | Mortgage plus tax, insurance, and maintenance | Rent that can rise once a year |
| At the end | Sale proceeds after the loan and selling cost | The down payment you kept, grown at the savings rate |
| Left out | Tax on the gain, a repair spike, SAC | A lease that ends, a move for work |
Common mistakes
- Reading the monthly payment gap as the whole answer.
- Leaving appreciation on because a long average looked kind.
- Treating break-even in a later year as a reason to buy when you already plan to move sooner.
Methodology on this page
Loan amount is price minus down payment, floored at zero. Principal and interest are the fixed-rate level payment, nominal annual rate divided by 12. Tax, insurance, and maintenance are flat. Home value and rent compound annually. Selling cost is a percent of the home value, and a shortfall at sale is part of the net cost of buying. The renter’s net cost subtracts only the gain on the down payment. Educational only — not a loan offer and not advice to buy or to rent.
Read the full FinTools4U methodology →Frequently asked questions
Does a lower monthly payment mean buying is cheaper?
No. Net cost includes the down payment, the loan that remains, selling costs, and the home value.
What is break-even?
The first year, out to 40, when buying’s net cost is no higher than renting’s. Your stay can be shorter.
Is the mortgage a level payment?
Yes. The same formula as the mortgage payment calculator. It is not SAC.
Is this financial advice?
No. It compares the assumptions you type, in your browser. PMMS 30-year fills the mortgage rate from the Freddie Mac survey, shows the survey date, and you can still edit the field. Rent growth and home appreciation stay as the rates you type. The link stores the number you apply. Indicative rate, not a recommendation.
Sources & further reading
- CFPB — Owning a Home — Borrower-facing context for mortgage payments. Local taxes and lender rules can differ from the sliders.
Related guide
Related calculators
Home Affordability
Check that the price fits the income before this comparison calls buying cheaper.
Mortgage Payment
The level principal-and-interest payment this page uses.
Amortization Schedule
How that payment splits into principal and interest each month.
Refinance Break-even
A later question, once you already owe the loan.
Inflation and Real Return
A separate view of a rate you type, in purchasing power.
Price vs SAC
This page uses a level payment. SAC pays principal faster and starts higher.