Finance calculator

Rent vs Buy Calculator

Enter a home price, mortgage terms, and a comparable rent, and see which path leaves you wealthier by the year you plan to move — buying (home equity after selling costs) or renting and investing the difference (a portfolio growing at your assumed return). See the year-by-year breakdown and the exact year buying breaks even, not just a single verdict.

Ending wealth, not just payment Year-by-year breakdown Breakeven year Transparent assumptions
Compare my numbers How to read the result

Not a mortgage offer — real rates, returns, and appreciation vary.

A rent vs buy calculator compares ending wealth, not monthly payment — home equity after selling costs if you buy, against an investment portfolio if you rent and invest the difference. Which one wins depends heavily on how long you stay, which the comparison below makes explicit.

Calculator

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The home you'd buy

$
%
%
yrs
%/yr
yrs

The rental you'd compare against

$
%/yr
Advanced assumptions (taxes, fees, investment return)
%/yr

% of current home value.

$/yr
%/yr

% of current home value.

$/mo
% of price

Paid once, when you buy.

% of sale

Agent commission etc., paid once, when you sell.

%/yr

On money not spent buying a home.

After 7 years, renting leaves you $21,838 wealthier.

Within 7 years, renting stays ahead — buying may still catch up over a longer horizon.

Buy

Rent + invest

Wealth at year 7

$193,154

$214,992

Starting cash needed

$96,600

$96,600

Mortgage principal & interest: $2,124/mo. Difference: -$21,838.

Year-by-year wealth (buy vs. rent + invest)
YearHome valueBuyer wealthRenter wealth
1$434,700$72,027$112,101
5$498,828$149,378$178,714
7$534,357$193,154$214,992

At a glance

Formula shown
Buy wealth = home value − mortgage balance − selling costs. Rent wealth = invested down payment, compounding, plus each year's cost difference.
Scenario support
Any horizon from 1–40 years, with a year-by-year table and the exact breakeven year.
Educational estimate
Planning support from the values you enter — not professional advice.

How to read your result

The headline states which path leaves you wealthier at the horizon you chose, and by how much. The breakeven year — the first year buying's running wealth overtakes renting's — matters more than the single horizon number, because it tells you how long you'd need to stay for buying to actually pay off; if your horizon is shorter than the breakeven year, renting currently wins in this model, and if it's longer, buying does. The year-by-year table underneath shows exactly how both paths grow, so you can see whether the gap is widening or narrowing rather than trusting a single endpoint.

The formula

Buyer's wealth

wealth = home value − mortgage balance − selling costs

Home value grows at your appreciation rate; the mortgage balance amortizes month by month at your rate and term.

Renter's wealth

portfolioₙ = portfolioₙ₋₁ × (1 + return) + (ownership cost − rent)

Starts at the down payment plus closing costs; each year it grows at your investment return and gains the cost difference.

Worked example

A $420,000 home with 20% down ($84,000, plus $12,600 in closing costs at 3%), a 6.5% mortgage over 30 years ($2,124/mo principal & interest), 1.1% property tax, $1,800/yr insurance, 1% maintenance, and 3.5% annual appreciation — compared against $2,200/mo rent growing 3% a year, with the difference invested at a 6% return. Over a 7-year horizon, renting comes out about $22,000 ahead ($193,000 buyer wealth vs. $215,000 renter wealth) — the down payment, closing costs, and early interest-heavy mortgage years weigh on buying at first. Run the same assumptions out to 30 years and buying overtakes renting around year 12, then pulls further ahead as the fixed mortgage payment stops rising while rent keeps growing — by year 30, buyer wealth is roughly $1.10 million against $830,000 for renting.

Assumptions

  • The renter invests the down payment and closing costs they didn’t spend on a home, plus (or minus) the difference between the yearly cost of owning and the yearly rent, at the investment return rate you enter.
  • Property tax and maintenance are modeled as a percentage of the CURRENT, appreciating home value each year, not the original purchase price.
  • The mortgage is a standard fixed-rate loan; principal and interest are calculated month by month, the same way a real amortization schedule works.
  • Selling costs (agent commission, etc.) are paid once, out of the sale proceeds, in the year you plan to move.
  • Results are estimates from the values you enter — not a forecast of real home prices, rents, or investment returns.

Limitations

  • Does not model the mortgage-interest or property-tax deduction — for a filer who itemizes, buying is somewhat cheaper than shown here.
  • Does not model property-tax caps some jurisdictions apply to reassessed value (e.g. California’s Prop 13), which would slow property-tax growth for a long-time owner.
  • Assumes a constant mortgage rate, appreciation rate, rent growth rate, and investment return for the whole horizon — real markets move unevenly year to year.
  • Home insurance and HOA fees are held flat; in practice both tend to rise over a long horizon.
  • Does not account for renter’s insurance, moving costs, or the value of flexibility (or stability) itself — only the financial totals.

Frequently asked questions

What is a rent vs buy calculator?

A tool that compares two financial paths over the years you plan to stay somewhere: buying a home (ending with home equity, after selling costs) versus renting and investing what you didn’t spend on a down payment (ending with an investment portfolio). It reports which path leaves you with more total wealth, not just which has the lower monthly payment.

What is the rent vs buy formula?

Buying’s ending wealth = home value − remaining mortgage balance − selling costs. Renting’s ending wealth = an investment portfolio that starts at your down payment plus closing costs, grows at your assumed return each year, and gains (or loses) the difference between that year’s ownership cost and that year’s rent. Whichever number is bigger at your horizon wins.

How many years do I need to stay for buying to make sense?

That’s exactly what the breakeven year answers — the first year buying’s running wealth overtakes renting’s. It depends heavily on your down payment, mortgage rate, appreciation, and investment-return assumptions, so there’s no universal number; run your own figures above rather than relying on a rule of thumb.

Does buying always build more wealth than renting?

No — this is a genuinely contested question in personal finance, not a settled one. With a high assumed investment return and a short time horizon, renting and investing the difference can come out ahead, since closing costs, selling costs, and the early years of a mortgage (mostly interest, little equity) weigh heavily against buying at first. Over longer horizons, the fixed mortgage payment against rising rent, plus appreciation, tends to favor buying. Change the horizon and investment-return assumptions above to see how sensitive your own answer is.

Why does the calculator assume I invest the difference if I rent?

Otherwise the comparison isn’t fair — a renter who spends everything they save on lifestyle upgrades will obviously end up with less wealth than a buyer who accumulates home equity. The standard way to compare the two paths honestly is to assume the renter invests the down payment they didn’t spend, and any extra cash flow renting leaves each year, at a market-like return.

Does this include mortgage interest tax deductions?

No — deducting mortgage interest and property tax only helps if you itemize, and itemizing depends on your filing status, other deductions, and the standard deduction in the tax year, which varies too much to model generically. Leaving it out is intentionally conservative for buying; if you itemize, your real result would be somewhat better for buying than this calculator shows.

What closing and selling costs should I expect?

Closing costs on a purchase typically run a few percent of the price (loan fees, title insurance, inspections, prepaid taxes and insurance); selling costs are usually dominated by agent commissions and typically run several percent of the sale price. Both vary by location and negotiation — the defaults here are reasonable starting points, not quotes.

Is renting always more flexible than buying?

Generally yes — a lease is easier to exit than a home you own, and buying then selling again within just a few years is usually expensive once closing and selling costs are counted, regardless of what this calculator’s wealth comparison shows. If you might need to move soon, that flexibility has value this tool doesn’t price in.

Does property tax and maintenance really scale with home value every year?

In this calculator, yes — both are modeled as a percentage of the current, appreciating home value, which is realistic in most U.S. states. Some states cap how fast a home’s assessed value (and therefore its property tax) can rise even while market value climbs faster — this calculator does not model that cap, so it may slightly overstate property tax in those states over a long horizon.

Can I compare more than one scenario?

Yes — change any input (a different down payment, a shorter horizon, a higher or lower investment return) and the result recalculates instantly. Try a few realistic ranges for your rate and return assumptions rather than relying on a single guess, since the winner can flip within a plausible range.

Related calculators

Tools that build on the same mortgage and investing math:

  • Mortgage CalculatorEstimate monthly payments, interest, taxes, insurance, PMI, and amortization using practical home-loan assumptions.
  • Mortgage Refinance CalculatorCompare your current mortgage to a new rate and term — monthly saving and break-even time on closing costs.
  • Investment CalculatorProject lump-sum and regular-contribution growth, plan a goal, and solve future vs present value, with fees and inflation.
  • Amortization Schedule CalculatorBuild a full payment-by-payment schedule showing how each instalment splits between principal and interest.
  • Savings CalculatorProject a savings balance or solve the deposit needed for a goal, with APR/APY, tax, and inflation.

Read the guide

For the payment side of this comparison worked through step by step, see Mortgage Payment vs. Total Cost of a Loan.

Sources

Finance disclaimer

This calculator is for educational and estimation purposes only. It is not financial, tax, or legal advice, and it is not a mortgage offer or pre-approval. It compares two modeled paths — buying a home versus renting and investing the difference — using the rate, growth, and return assumptions you enter; it does not model mortgage-interest tax deductions, closing-cost or rate variation by lender, or property-tax caps some jurisdictions apply to reassessed value. Real market returns, home appreciation, and rent growth are not guaranteed and can differ significantly from any assumption. Confirm your specific numbers with a lender, tax professional, or financial advisor before making a decision.

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Authorship & verification

Written and maintained by

  • Formula and examples verified on 15 August 2026
  • Educational estimate only

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