Rent vs Buy Calculator
Free rent vs buy calculator: compare your net worth if you buy a home or rent and invest the difference, year by year, with the break-even point and all costs.
| Year | Home value | Loan balance | Net worth if you buy | Net worth if you rent |
|---|
Both sides spend the same: whoever pays less each month invests the difference at the same return, and the renter invests the down payment and buying costs. Net worth if you buy is the home value minus selling costs and the loan balance, plus investments. Taxes and inflation are not included.
No currency is shown on purpose: the figures come out in whatever unit you type in.
What it does
Buying a home is not only the mortgage payment against the rent. The buyer also pays property tax, insurance, maintenance and the costs of buying and selling, but builds equity and gets the home's appreciation; the renter can invest the down payment and whatever the house would have cost on top of the rent. This calculator follows both paths month by month and shows which one leaves you with more money after the years you plan to stay, and from which year buying starts to win.
How to use it
- Type the home price, the down payment and the mortgage, plus the yearly costs of owning.
- Type the rent of a similar home and how fast rents rise.
- Choose the growth of the home price, the return on investments and how long you will stay.
The arithmetic runs in your browser. Nothing you type is sent anywhere and nothing is stored, so you can use these with real numbers.
Frequently asked questions
What is the price-to-rent ratio?
The home price divided by a year of rent. Below about 15 buying tends to pay off; above about 20 renting usually comes out ahead, unless home prices rise fast. It is a quick rule: this calculator adds the costs and the time you stay.
Why does buying lose if I stay only a few years?
Buying and selling cost money up front — often 2–5% to buy and 5–6% to sell — and the first mortgage payments are mostly interest. It usually takes several years of appreciation and principal payments to recover those costs.
What investment return should I use?
The return you would really get on the money you do not put into the house, after fees. A mix of stocks and bonds has returned about 5–7% a year over long periods; a savings account much less. Try a few values: the answer often depends on it.
Are taxes included?
No. The mortgage interest deduction, tax on investment gains and any tax on the sale of the home depend on the country and on your situation. In the US most homeowners take the standard deduction, and up to $250,000 of gain on a main home ($500,000 for couples) is tax-free.
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