Rent vs Buy Calculator — Which Costs Less Over 5 Years?
Compare the true cost of renting against buying a home — mortgage, property tax, insurance, maintenance, and home value — with a simple, clearly labeled model and a year-by-year break-even table out to 30 years.
Your scenario
Advanced options — closing and selling costs, HOA, tax, insurance, maintenance and appreciation
Closing costs, property tax, insurance, maintenance, appreciation and the optional layers — selling costs, HOA, renting extras, escalation, PMI, investing and tax detail — are already included at their default values; open Advanced options to change them.
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The verdict
Rent cost vs. buy cost
The navy bar is everything renting costs you; the emerald bar is the net cost of buying — both redraw from your inputs.
Year by year: the break-even table
The same verdict, rerun at every stay length from 1 to 30 years. Buying starts behind — its upfront costs land on day one — then catches up as rent rises and equity builds. Selling costs, if you set them, are charged in every year as if you sold at the end of that year.
| Year | Total cost of renting | Net cost of buying | Difference |
|---|
The first year the net cost of buying falls to or below the total cost of renting is the break-even year.
- Buying is not just the mortgage payment — and renting is not just the rent check: the model compares total rent paid against the net cost of buying, every outflow minus the equity you build.
- At the defaults over 5 years, renting wins by $8,635.25 — $127,419.26 of rent against a $136,054.51 net cost of buying.
- Optional layers can charge buying the opportunity cost of its upfront cash, credit simplified tax savings, add selling costs, HOA fees, PMI and renting extras, and invest the monthly difference for whichever side costs less.
Compare the true cost of renting against buying a home — mortgage, property tax, insurance, maintenance, and home value — with a simple, clearly labeled model. All figures in dollars.
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Three companion tools for home financing.
How it works
Three steps from your numbers to a verdict.
Describe renting
Enter your monthly rent and how fast you expect it to rise each year.
Describe buying
Enter the home price, down payment, mortgage terms, and yearly ownership costs.
Read the verdict
Total rent paid and the net cost of buying appear side by side, with the winner and the margin.
The math behind the verdict
Buying is not just the mortgage payment — and renting is not just the rent check. The model compares total rent paid against the net cost of buying: every dollar you spend on the home, minus the equity you build.
Monthly mortgage P and I uses the standard amortization formula: m = P × r ÷ (1 − (1 + r)−n). Equity = appreciated home value − remaining loan balance.
The same calculation is rerun at every horizon from 1 to 30 years to build the break-even table under the verdict. In the worked example the two sides are within $7 of each other at year 7 — $183,899.09 of rent against a $183,905.58 net cost of buying — and buying pulls ahead in year 8: a break-even of about 7.0 years. Selling costs, when set, are charged against the home value in every horizon year, as if you sold at the end of that year; tax savings credit only the mortgage interest and property tax above your standard deduction, at your combined federal and state marginal rates.
Worked example: $2,000/mo rent (+3%/yr) vs. $400,000 home, 10% down, 6.5%/30y, 5 years
| Item | Calculation | Result |
|---|---|---|
| Monthly mortgage P and I | $360,000 at 6.5%/30y | $2,275.44 |
| Total rent paid (5 yrs) | $2,000 × 12 × (1 + 1.03 + … + 1.03⁴) | $127,419.26 |
| Net cost of buying (5 yrs) | Outflows $238,526.69 − equity $102,472.18 | $136,054.51 |
| Verdict | $127,419.26 − $136,054.51 | Renting wins by $8,635.25 |
Go deeper
What the model counts — and the big things it leaves out.
- Total rent paid: monthly rent grown by the yearly increase, summed over the comparison period.
- Buying outflows: down payment + closing costs + every mortgage payment + property tax + insurance + maintenance for the period.
- Equity: home value grown by appreciation, minus the remaining loan balance after the period’s payments.
- Net cost of buying: outflows minus equity — the true cost once you account for the asset you own.
- Verdict: rent paid minus net buy cost. Positive means buying is cheaper; negative means renting wins.
- Optional layers: an investment return adds the opportunity cost of the upfront cash to buying, and — with “Invest the monthly difference” ticked — credits the cheaper side each month with an invested fund. Combined federal and state marginal rates subtract simplified tax savings on the mortgage interest and property tax above your standard deduction. Selling costs, HOA fees, renter’s insurance and a security deposit, property-tax and insurance escalation, and PMI can each be switched on in Advanced options — all start at 0.
- The full tax picture — the optional tax layer is still simplified: it credits the mortgage interest and property tax above your standard deduction at your combined federal and state marginal rates. Phase-outs, the SALT cap, and local rules can shrink the real benefit further.
- Exact selling and moving costs — selling costs and upfront rent costs are optional inputs now, but each is a single flat figure: your actual agent commission, transfer taxes, and moving bills will differ.
- Rent control — capped or regulated rent increases are not modelled; the rent side grows at one flat yearly rate. (HOA fees are an optional input in Advanced options.)
- Flexibility value — renting lets you move cheaply; owning locks you in.
Use this as a starting point, not a final decision — talk to a financial advisor for the full picture.
What moves the verdict: the five levers, ranked by power
How long you stay beats everything. Then rent growth, then appreciation — the rate is rarely the decider.
The rent-versus-buy verdict is moved by five levers, and they are not equals. How long you stay dominates: buying costs are upfront and fixed, so each extra year spreads them thinner, while renting costs recur — a short stay almost always favours renting and a long stay usually favours buying, with the break-even year as the dividing line. Rent growth comes next: fast-rising rents make the fixed payment of ownership look better every year. Appreciation follows: it rewards the owner but is the least certain lever, because it is a forecast, not a contract. The mortgage rate and the investment return on the deposit matter, but they rarely overturn a verdict the first three levers have already made.
The practical use of the ranking is to test the verdict, not just to read it. Change one lever at a time — stay two years less, assume rents flat, assume no appreciation — and watch whether the verdict survives. A verdict that survives all three stresses is robust; a verdict that flips on any one of them is a bet on that lever, and should be named as such before it is acted on. The year-by-year table on this page is the tool for exactly that test.
Break-even years, opportunity cost and the honest comparison: renting vs buying explained.
The costs renters never see — and buyers forget to count
Maintenance, insurance, taxes and the deposit’s lost earnings all belong on the buying side.
Renting bundles most housing costs into one payment; buying unbundles them, and the unbundled ones are easy to forget. Maintenance and repairs, buildings insurance, property taxes, and the occasional large bill — a roof, a boiler — all sit on the buying side of the ledger, alongside the mortgage payment. So does the deposit’s opportunity cost: the down payment and closing costs, once spent on the house, stop earning whatever they would have earned invested, and that forgone return is a real annual cost of buying even though no bill ever arrives for it.
None of this makes buying wrong; it makes the comparison honest. Ownership also builds equity with every payment and ends with an asset, while renting ends with nothing to sell — the verdict must weigh the wealth built against the costs borne, over the same horizon, with the same assumptions. A comparison that counts the mortgage payment but not the maintenance, or the rent but not the deposit’s earnings, is not a comparison; it is a preference with numbers attached.
Frequently asked questions
Quick answers about comparing renting and buying.
How does this rent vs buy calculator work?
It sums your total rent over the comparison period (with yearly increases) and compares it with the net cost of buying: down payment, closing costs, mortgage payments, tax, insurance, and maintenance, minus the equity you build. The cheaper side wins.
Why does renting win over short periods?
Buying front-loads big costs — down payment, closing costs, and interest-heavy early mortgage payments — while equity builds slowly. Over just 5 years those sunk costs often exceed what renting costs, which is why renting wins in the default scenario by about $8,635.
When does buying usually become cheaper?
Usually over longer horizons: as years pass, rent keeps rising while your mortgage payment stays fixed, and more of each payment becomes principal. Try setting the comparison to 10 or 15 years above — buying typically takes the lead.
What costs of buying does the model include?
Down payment, closing costs, mortgage principal and interest, property tax, home insurance, and maintenance — then it subtracts your equity (appreciated home value, less any selling costs you set, minus the remaining loan). Optional Advanced inputs can add selling costs, HOA fees, renter’s insurance and a security deposit, property-tax and insurance escalation, and PMI; optional layers add the opportunity cost of upfront cash and simplified tax savings at your combined federal and state marginal rates, credited only on the amount above your standard deduction.
How much does home appreciation matter?
A lot — it is the single most powerful assumption. The default is a conservative 1.9% per year. At 3% per year over 5 years the same scenario flips toward buying; at 0% renting wins by much more. Adjust it to test your local market.
Should I decide purely on this calculation?
No. This is a simplified cost model, not financial advice. Job stability, how long you will stay, local market conditions, and lifestyle flexibility all matter. Use the verdict as a starting point and talk to a financial advisor before deciding.
What do the investment return and tax rate options do?
They switch on the optional layers. An investment return charges buying the opportunity cost of its upfront cash — what the down payment and closing costs could have earned if invested instead — and, with “Invest the monthly difference” ticked, credits the cheaper side each month with an invested fund. The federal and state marginal rates credit buying with simplified tax savings on mortgage interest and property tax, but only on the amount above your standard deduction. Both rates start at 0 and the fund starts off, so the default verdict is the plain cost comparison.
What is the break-even year in the year-by-year table?
The table reruns the same comparison at every stay length from 1 to 30 years. The break-even year is the first year the net cost of buying falls to or below the total cost of renting: before it, renting is cheaper; from it on, buying pulls ahead and the gap usually widens. If no year breaks even, renting stays cheaper at every horizon up to 30 years at the current assumptions — change the appreciation, the rent increase, or the selling costs and the break-even year moves.
What matters most in a rent vs buy decision?
How long you will stay. Buying costs are upfront and fixed, so longer stays spread them thinner, while renting costs recur — a short stay almost always favours renting. After length of stay, rent growth and appreciation matter most; the mortgage rate and the deposit’s investment return rarely overturn a verdict the first three levers have made. Test the verdict by stressing each lever in turn.
Should the deposit’s investment return count as a cost of buying?
Yes — it is the opportunity cost of ownership. Once the down payment and closing costs are spent on the house, they stop earning whatever they would have earned invested, and that forgone return is a real annual cost of buying even though no bill arrives for it. A comparison that ignores it flatters buying. Count it alongside maintenance, insurance and taxes on the buying side, over the same horizon as the rent.
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Disclaimer
This calculator is a simplified model for information only — not financial advice. Selling costs, HOA fees, renter’s insurance, a security deposit, cost escalation, and PMI are optional inputs that all start at 0, so the default verdict excludes them; local rules are excluded throughout. Tax savings and investment returns on your upfront cash are optional, simplified estimates, not predictions. Appreciation and rent-growth assumptions are guesses about the future and will not match reality exactly. A rent-vs-buy decision depends on your finances, market, and plans — verify with your own numbers and a qualified financial advisor.