Rent vs buy calculator
It totals what you pay as a buyer, subtracts your net equity when you sell, and compares that with total rent minus the return on investing the upfront cash.
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How to use it
- Enter home price, down payment, annual interest or profit rate, loan term, monthly rent and yearly rent increase.
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
Buy cost = down payment + buying costs + payments made + yearly ownership costs - (future home value x (1 - selling costs) - remaining balance). Rent cost = total rent - annual compound return on (down payment + buying costs).
Example
Inputs: Home price = 1,000,000, Down payment = 20 %, Annual interest or profit rate = 5 %, Loan term = 25 years, Monthly rent = 4,000. Result: Advantage of the cheaper option: 225,417.46; Verdict: Buying costs less; Net cost of buying: 180,202.99.
Limits and caveats
- A simplified model: it leaves out taxes and investing the monthly gap between payment and rent.
- The result is very sensitive to the growth and return assumptions, so try several scenarios.
Questions about this tool
What do ownership costs cover?
Maintenance, insurance and service or owners association fees, as a yearly share of the home value.
Why is investment return taken off the rent cost?
A renter keeps the down payment and buying costs and can invest them, and that return lowers the real cost of renting.
Why can the cost of buying be negative?
If your net equity at sale exceeds everything you paid, buying made you money over the period.