Rent vs Buy Calculator
Compare the total cost of renting against buying a home over the same number of years.
Formula and sources updated · Data sources · 1View algorithm, constants and default inputs (JSON)
About this calculator
Comparison years and mortgage term are independent. Monthly ownership cash flow includes the mortgage until payoff and the entered annual ownership-cost rate.
Worked example
calculated with the default values below
Monthly rent 2,000 $ · Home price 400,000 $ · Down payment 20 % · Mortgage interest rate 6.5 % · Years to compare 10 years · Mortgage repayment term (years) 30 years · Tax, insurance and upkeep per year 2.5 % · Annual rent increase 0 % · Home appreciation 0 %/year · Investment return if renting 0 %/year · Purchase closing costs (%) 0 · Sale costs (% of future home value) 0 · Primary result Buying advantage Buying advantage -53,997.73 $ · Total cost of renting 240,000.00 $ · Net cost of buying 293,997.73 $ · Average monthly cost of owning 2,449.98 $ · Net worth after buying 128,716 $ · Net worth after renting and investing 182,714 $ · Remaining mortgage balance 271,283.60 $ · Home value at the horizon 400,000.00 $ · Sale transaction costs 0.00 $ · Purchase closing costs 0.00 $ · Monthly mortgage payment (principal and interest) 2,022.62 $ · Buying minus renting: net worth -53,997.73 $ · Down payment 80,000 $ · Scenario result Renting and investing comes out ahead over 10 years
Method and assumptions
Comparison years and mortgage term are independent. Monthly ownership cash flow includes the mortgage until payoff and the entered annual ownership-cost rate. Rent and home values change annually; the monthly spending advantage is invested by whichever household spends less, with equal initial capital. Purchase closing costs and sale costs are explicit; sale costs apply to future home value. Net cost and terminal net worth are separate views. This simplified scenario excludes income-tax effects and does not recommend a purchase.
Data sources
Disclaimer
These calculators give estimates for general information only. They are not financial, tax or investment advice and do not take your personal circumstances into account. Before borrowing, investing or filing, confirm the numbers with a qualified adviser in your jurisdiction.
Implementation source
This record describes the implementation used by this page. It is not independent validation. External references, when available, support only the stated formula or definition; estimates and custom rules retain their own assumptions.
Formula and variables
net ownership cost = down payment + purchase fees + payments + ownership expenses − sale equity; buyer net worth = sale equity + invested savings; difference in wealth = buyer − renter
Net cost and terminal net worth are separate views. This simplified scenario excludes income-tax effects and does not recommend a purchase.
Frequently asked questions
How is the mortgage term different from the comparison period?
Comparison years and mortgage term are independent. Monthly ownership cash flow includes the mortgage until payoff and the entered annual ownership-cost rate. Rent and home values change annually; the monthly spending advantage is invested by whichever household spends less, with equal initial capital. Purchase closing costs and sale costs are explicit; sale costs apply to future home value. Net cost and terminal net worth are separate views. This simplified scenario excludes income-tax effects and does not recommend a purchase.
Does buying beat renting at a 6.5 percent mortgage over ten years?
A mortgage rate alone does not determine the result. Comparison period, loan term, rent growth, appreciation, ownership expenses, transaction fees and investment assumptions can reverse the comparison. Check both terminal net worth and net cost, and try several plausible scenarios instead of treating the default as a recommendation.