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Rent vs Buy Calculator

Run a side-by-side scenario with crossover timing, asset balances, and year-by-year details.

01 / Inputs

Buy Scenario

Rent + Invest Scenario

02 / Your estimate

Side-by-Side Results

Selected payments and asset balances only, not full net wealth or a buy/rent recommendation. Cumulative costs are not deducted from asset balances and cash budgets are asymmetric. Excludes property taxes, insurance, maintenance, HOA, PMI, closing and selling costs, and tax effects. Mortgage principal and interest stop after payoff, at most 360 months; afterward there are no renter deposits from mortgage-minus-rent savings.

Run the comparison to see selected payments and asset balances.

Model note: home appreciation is fixed at 3%/yr and this tool does not model property tax, insurance, maintenance, PMI, HOA, buyer closing costs, selling costs, or tax effects.

How to Use This Calculator

This calculator compares the total asset balances of renting versus buying a home over any time horizon from 1 to 40 years. Start by entering the home price, your down payment percentage, and the current mortgage rate for the buy scenario. The calculator assumes a standard 30-year fixed-rate mortgage with amortized monthly payments.

For the rent scenario, enter the monthly rent for a comparable home, expected annual rent increases, and the annual investment return you expect to earn on the money you save by not buying. This includes both the down payment amount and any monthly cash flow differences between renting and buying.

The most critical inputs to test are your time horizon and down payment percentage. Run the same scenario with a 5-year, 7-year, and 10-year horizon. Then re-run with 5% down versus 20% down. Finally, stress-test your assumptions across rent growth, investment return, and time horizon — in this example the calculator uses a 3% annual home-price-growth assumption; actual appreciation can be higher, lower, or negative. These scenarios illustrate sensitivity within the limited model.

The cumulative-payment crossover marks the first year cumulative rent reaches or exceeds the down payment plus mortgage payments. It does not establish how long you must stay to break even economically.

Do not forget to account for the opportunity cost of your down payment. That $60,000 down payment would be about $120,580 after 10 years at an assumed 7% nominal APR compounded monthly. By tying it up in a home, you give up that growth. The calculator models this by assuming the renter invests the entire down payment amount from day one, plus any monthly savings from renting versus owning.

Worked example: $300,000 home, 20% down, 5-year and 10-year scenarios

Scenario setup: A $300,000 home with 20% down ($60,000 down payment, $240,000 loan) at a 6.5% mortgage rate. The engine computes a standard 30-year fixed-rate amortized payment of $1,516.96 per month, principal and interest only. Renting a comparable home costs $1,800/month with 3% annual rent increases, and the renter invests the $60,000 down payment at a 7% annual return compounded monthly.

What the engine actually models: The buy scenario counts total cost as the down payment plus mortgage payments, and buyer home equity as home value minus remaining loan balance. In this example the calculator applies a 3% annual home-price-growth assumption, applied once annually. Actual appreciation can be higher, lower, or negative. The renter scenario compounds the invested down payment at the specified return and adds a monthly contribution only in months where the mortgage payment exceeds rent. Here the mortgage payment ($1,517) is below rent ($1,800), so no monthly contribution is added and renter investment balance is simply the compounded down payment. The cumulative-payment crossover year is the first year cumulative rent paid exceeds cumulative buy cost.

5-year outcome (engine outputs): Total cost of buying $151,018 (down payment plus 60 mortgage payments); total cost of renting $114,677. Buyer home equity $123,116 (home value after five years of 3% appreciation minus the remaining loan balance); renter investment balance $85,058 (the $60,000 down payment compounded at 7%). The asset-balance difference is $38,058; this is not a complete economic advantage. The cumulative-payment crossover year is not reached — renting never becomes the costlier cumulative path within the 5-year window.

10-year outcome (engine outputs): Total cost of buying $242,036; total cost of renting $247,620. Buyer home equity $199,712; renter investment balance $120,580. The asset-balance difference is $79,133, and the cumulative-payment crossover year — the first year cumulative rent cost exceeds cumulative buy cost — arrives in year 10.

Read the result correctly: This simplified model does not include property tax, insurance, maintenance, HOA fees, PMI, buyer closing costs, selling costs, or tax effects — treat results as a starting point, not a comprehensive total-cost model of homeownership. It also fixes appreciation at 3% per year and assumes the renter earns the full investment return with no risk. Stress-test your own rent growth, return, and horizon assumptions, and remember that real ownership costs run well above principal and interest.

Key terminology

EquityCurrent market value minus remaining mortgage balance, growing through principal paydown and market appreciation.
PMIPrivate Mortgage Insurance required under 20% down, costing 0.5-1.5% of loan annually.
Closing costsOne-time purchase fees (2-5%) and selling costs (5-6%) including commissions and transfer taxes.
Opportunity costThe return you forgo from your down payment and monthly savings that could otherwise be invested.
Cumulative-payment crossover yearThe first year cumulative rent paid exceeds the cumulative cost of buying. This is not an economic break-even.
AmortizationEarly mortgage payments are mostly interest; later payments shift to principal. Equity accelerates over time.

Methodology and sources

The calculator uses a standard 30-year fixed-rate amortization formula for the monthly mortgage payment. The buy scenario counts total cost as the down payment plus all mortgage payments, and buyer home equity as home value minus remaining loan balance. Home value appreciates 3% per year, applied once annually — appreciation is fixed in the model rather than an input. The rent scenario compounds rent at the specified annual increase and invests the down payment at the specified return, compounded monthly, plus a monthly contribution only in months where the mortgage payment exceeds rent — negative cash flow simply means no contribution is added. Cumulative-payment crossover year is the first year cumulative rental cost exceeds cumulative purchase cost.

This simplified model does not include property tax, insurance, maintenance, HOA fees, PMI, buyer closing costs, selling costs, or tax effects — treat results as a starting point, not a comprehensive total-cost model of homeownership.

Disclaimer: Educational comparison only. Consult a licensed financial advisor before making purchase decisions.

Home / Finance / Rent vs Buy Calculator

Common mistakes to avoid

  • Ignoring maintenance and transaction costs: Buyers pay 2-5% in closing costs and 5-6% in selling costs. A $400,000 home can cost $30,000+ to buy and sell.
  • Comparing rent to mortgage principal only: True monthly cost includes property taxes (0.5-2%), insurance ($100-300/mo), PMI (0.5-1.5%), HOA fees, and maintenance (1%). These add 30-50% to quoted mortgage payments.
  • Forgetting down payment opportunity cost: A $50,000 down payment at 7% nominal APR compounded monthly grows to about $100,483 in 10 years or $201,937 in 20 years.
  • Assuming 3-5% appreciation is guaranteed: Quik-Calc treats long-run national home-price growth as a scenario assumption in the low single digits (published FHFA House Price Index data is the reference for actual historical behavior), with annual declines possible — 2006-2011 saw markets fall 20-40%. Always run a downside case.
  • Ignoring lifestyle factors: Stability, freedom to renovate, and school districts have real value. Flexibility of renting matters if your career is uncertain.
  • Using a single scenario: Run best case, base case, and worst case at both short and long time horizons for a complete picture.

Frequently asked questions

Does the calculator include tax benefits of homeownership?

The calculator excludes all tax effects. Any benefit depends on individual circumstances and must be assessed separately.

What time horizon should I use?

Compare horizons from 1 to 40 years. This model omits transaction and ownership costs and does not establish an economic winner.

How does down payment size affect the decision?

Larger down payments reduce the modeled loan and mortgage payment, while increasing the initial renter investment. PMI is excluded at every down payment level.

Is buying always better over the long term?

This simplified model cannot determine which choice is better. It fixes home appreciation at 3% annually and compares asset balances without equalizing all cash budgets or deducting cumulative costs.

What maintenance costs should I expect?

A common planning heuristic is about 1% of home value per year, with older homes often estimated at 1.5-2% (rule of thumb, not a published standard). This calculator does not include maintenance in its cost comparison, so budget for it separately.

How do market conditions affect the decision?

Rates and rent affect the selected payments. Appreciation is fixed at 3% in this model; market uncertainty and omitted costs can change an actual decision.