A typical comparison over 15 years
A $350,000 home with 20% down at 6% mortgage interest, against $1,800 monthly rent rising 3% a year, breaks even at year 8 — buying is cheaper if you plan to stay that long or more.
Rent vs. buy calculator
This is an estimate for information only. It is not financial or real-estate advice — a full analysis should include local tax rules, closing costs and your personal circumstances.
Result
Fill in the fields to see your result.
How it works
The net cost of buying is every dollar paid (down payment, mortgage, tax, insurance, maintenance) minus the equity built up: home value growth plus the mortgage balance paid down. The net cost of renting is total rent paid minus the growth the down payment would have earned if invested instead of spent on a home.
Early on, buying carries high fixed costs (the down payment, closing-type costs implicit in a fresh mortgage) that renting avoids, so renting usually looks cheaper for the first few years. As equity builds and rent keeps rising, buying's net cost curve typically crosses below renting's — that crossing point is the break-even year.
Formulas used
Net cost of buying
Cost = Cash paid − (Home value − Mortgage balance)
Net cost of renting
Cost = Rent paid − Growth on the down payment invested
Worked examples
A short stay favors renting
The same numbers over just a 3-year horizon usually favor renting — buying's upfront costs rarely pay off before then.
Assumptions and limits
- Mortgage payments, tax rate and maintenance rate stay level relative to the home's value or the loan terms for the whole horizon.
- Rent grows at a constant annual rate.
- Closing costs on purchase and selling costs at the horizon are included; capital gains tax and the mortgage interest deduction are not.
Frequently asked questions
Why does renting sometimes never become more expensive?
If home appreciation is low, the mortgage rate is high, or the investment return on the down payment is strong, renting can stay cheaper for the entire horizon you check — try a longer horizon or different assumptions to see if that changes.
Does this include selling costs when you eventually sell the home?
Yes — the selling-costs field, typically 6–10% for agent commissions and closing costs combined, is subtracted from the home value before comparing it to what renting would have cost, which is why buying rarely wins in the first year or two.
Does this include the mortgage interest tax deduction?
No — tax treatment varies too much by country and personal situation to model generically; it would improve buying's relative position where it applies.
What return should I assume for the down payment?
A common benchmark is the expected return of a diversified investment portfolio — using too high a rate unfairly favors renting, and too low a rate unfairly favors buying.
Updated
Related calculators
Mortgage Work out a mortgage payment, the total interest and the full amortisation schedule, with extra payments and taxes included. Future value Find what a lump sum plus regular monthly deposits will grow to at a given interest rate. Present value Find what a future lump sum, a series of future payments, or both together are worth today at a given discount rate. Loan Work out the payment, total interest and real annual rate of a personal or car loan, fees and extra payments included. Compound interest See what an investment grows to with compound interest, with or without regular contributions, at any compounding frequency. Retirement Estimate how much you need for retirement, what your current savings will grow to, how much to save monthly, or how long your savings will last.