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Rent vs Buy Calculator – Is It Better to Rent or Buy a Home?

Compare the long-run cost of renting and buying the same kind of home. The calculator includes your mortgage, property tax, maintenance, buying and selling costs, house-price growth and rent increases, and assumes a renter invests the money they don’t spend on a deposit.

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How to use the rent vs buy calculator

  1. Enter the home price, down payment, mortgage rate and term.
  2. Enter the monthly rent for a similar home.
  3. Enter how long you’ll stay.
  4. Adjust the assumptions: home price growth, rent increase, return on invested savings, property tax, maintenance and insurance, and buying and selling costs.

You’ll see which option leaves you better off after your stay, the net worth for each, the mortgage payment and the year buying starts to win, if it does. The table shows both net worths year by year.

How the comparison works

If you buy, you pay the down payment and buying costs upfront, then each month the mortgage plus property tax, maintenance and insurance. At the end the home is sold: its value minus selling costs and the remaining mortgage is your equity.

If you rent, you invest the money a buyer would have spent upfront. Each month, if owning costs more than renting, the renter invests the difference; if renting costs more, the buyer invests the difference instead.

Buyer’s net worth = Home value × (1 − selling costs) − Mortgage left + Buyer’s savings
Renter’s net worth = Invested deposit and costs + invested monthly savings

Worked example

  • Home $400,000, 20% down, 6.5% for 30 years → mortgage payment ≈ $2,022.62
  • Rent $2,200 a month, rising 3% a year
  • Home value growth 3%, investment return 6%
  • Property tax 1.1%, maintenance and insurance 1.5%, buying costs 3%, selling costs 6%
  • Stay 8 years

After 8 years the buyer’s net worth is about $192,600 and the renter’s about $215,800, so renting is ahead by roughly $23,000. Stretch the stay to 15 years or raise house-price growth and buying usually pulls ahead.

What tips the balance

  • Price-to-rent ratio. Where homes cost many times the yearly rent, renting often wins.
  • How long you stay. Under about five years, transaction costs are hard to recover.
  • Interest rates. Higher rates make buying more expensive.
  • Price growth. Strong growth favours buyers; flat or falling prices favour renters.
  • Discipline. The renter only comes out ahead if they actually invest the difference.

Not just money

Owning gives you stability, the freedom to renovate and protection from rent rises. Renting gives flexibility to move for work, no repair bills and less risk if prices fall. Weigh both alongside the numbers.

See your full payment with the mortgage calculator, check your budget with the home affordability calculator, and in England or Northern Ireland add Stamp Duty to your buying costs. Results depend on your assumptions — see our disclaimer.

Frequently asked questions

How does the rent vs buy calculator decide?

It compares your net worth after the years you plan to stay. For buying, that is the home’s value after selling costs, minus the mortgage left, plus any savings. For renting, it is the down payment and buying costs invested, plus whatever renting saved each month.

Is it better to rent or buy for 8 years?

It depends on prices and rents where you live. In the default example — a $400,000 home with 20% down at 6.5%, versus $2,200 rent — renting comes out ahead after 8 years by about $23,000, because buying and selling costs and high early interest take time to recover.

Why does staying longer favour buying?

Buying has big one-off costs: closing costs when you buy and agent fees when you sell. The longer you stay, the more years of price growth and mortgage paydown you get to spread those costs over.

What return should I assume on invested savings?

Use what you would realistically earn on that money. A savings account might pay a few percent; a long-term diversified stock fund has historically averaged more, but with ups and downs.

Does it include mortgage interest tax deductions?

No. Tax rules vary widely by country, and in the US many people take the standard deduction. If you itemise, buying may look a little better than shown.

Is buying always a good investment?

No. House prices can fall, repairs can be expensive and selling takes time. Buying gives stability and control over your home; renting gives flexibility. Both can be good choices.

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