🤔 Rent vs Buy Calculator
Enter home price, monthly rent, down payment, and your financial assumptions to compare the true total cost of renting vs buying over any time horizon. Includes home appreciation, opportunity cost of the down payment, all ownership costs, and net worth impact. See the break-even year and a personalised verdict for your situation.
🤔 Rent vs Buy Comparison
⚠️ Disclaimer: Projections based on inputs. Real estate and investment returns vary. Consult a financial advisor.
📈 Year-by-Year Comparison
Run the calculator first to see the timeline.
| Year | Cumul. Rent Cost | Cumul. Buy Cost | Net Worth (Rent) | Net Worth (Buy) | Winner |
|---|---|---|---|---|---|
| Run the calculator first. | |||||
📐 How Rent vs Buy Is Calculated
True Cost of Renting
True Cost of Buying
Net Worth Comparison
Key Assumptions & Limitations
❓ Frequently Asked Questions
Rent vs Buy Calculator - The Question Isn't Just About Monthly Payments
The mortgage payment vs monthly rent comparison is the wrong way to evaluate rent vs buy. A fair comparison must account for all the costs and benefits on both sides - homeownership costs beyond the mortgage (taxes, maintenance, insurance), the investment return on the down payment a renter keeps invested, home equity buildup, and the transaction costs of buying and selling. Only when all these are modelled does the real break-even become visible.
The Price-to-Rent Ratio - The Market Signal
The price-to-rent ratio (PTR) = Home Price ÷ Annual Rent gives a quick read on whether a market favours buying or renting:
PTR Interpretation
- Below 15: Strongly favours buying. Home prices are low relative to rent. Equity builds faster than rent.
- 15–20: Borderline. Use the full calculator with your specific assumptions.
- 20–25: Generally favours renting unless staying 8+ years with strong appreciation assumptions.
- Above 25: Strongly favours renting or very long time horizon needed. High-cost coastal markets.
PTR by Market Type (2025)
- San Francisco, NYC: 30–50+ (strongly renting)
- Los Angeles, Boston: 25–35 (favours renting)
- Austin, Denver: 18–25 (borderline)
- Chicago, Phoenix: 14–20 (borderline to buying)
- Detroit, Cleveland: 8–12 (strongly buying)
The Opportunity Cost of the Down Payment
A 20% down payment on a $400,000 home is $80,000. A renter who keeps that $80,000 invested in a diversified index fund at 8% annual return accumulates:
- After 5 years: $117,500 (vs the buyer's $80K down growing through home appreciation)
- After 10 years: $172,600
- After 20 years: $372,900
The buyer's down payment also grows - through home equity via mortgage paydown and appreciation. The question the calculator answers: which path builds more net worth after accounting for all costs and all investment returns? The answer depends heavily on the home appreciation rate assumption and the renter's actual investment discipline.
When Buying Is Clearly Better
- Long time horizon (7+ years): Transaction costs are amortised over many years; equity builds substantially.
- Low price-to-rent ratio (below 15): Buying is cheap relative to renting in that market.
- Strong local appreciation history: Markets with consistent above-average appreciation accelerate equity.
- Fixed vs rising rents: A fixed-rate mortgage provides payment certainty as rents typically rise 3–5%/year.
- Personal value of stability and control: No landlord risk, ability to renovate, stability for children's schooling. These non-financial factors matter and aren't captured in the calculator.
When Renting Is Clearly Better
- Short time horizon (under 3–5 years): Transaction costs alone (5–6% to sell + 2–3% to buy) require significant appreciation just to break even.
- High price-to-rent ratio (above 25): Renting the same quality home costs significantly less than owning it.
- Career or location uncertainty: Buying locks you in; mobility has real economic value in a dynamic job market.
- Renter investing the difference: A renter who genuinely invests the down payment and monthly savings differential can build comparable wealth - but this requires investment discipline.