How to use the rent vs buy calculator
- Under Buying, enter the home price, down payment, mortgage rate and term, property tax, maintenance, insurance, HOA and buying and selling costs.
- Under Renting, enter the monthly rent, the expected yearly rent increase and renters insurance.
- Set the home value growth, the return you'd earn investing, and how many years you'll stay.
The calculator works month by month. Whoever spends less, the owner or the renter, invests the difference. The renter also invests the down payment and buying costs from day one. Each year it compares the owner's wealth (home value minus selling costs and the remaining loan, plus investments) with the renter's investments.
The example, year by year
$350,000 home, 10% down, 6.3% for 30 years, 1.1% property tax, 1% maintenance, $1,800 insurance, 3% buying and 6% selling costs, 3% home value growth. Rent $2,000 rising 3% a year. Investments earn 6%.
| Year | Wealth if you buy | Wealth if you rent |
|---|---|---|
| 1 | $27,527 | $56,927 |
| 3 | $56,204 | $80,303 |
| 5 | $87,214 | $104,340 |
| 8 | $138,594 | $141,510 |
| 9 | $157,142 | $154,163 |
| 10 | $176,457 | $166,928 |
In year one, owning costs about $2,729 a month against $2,015 for renting, and selling right away would lose the buying and selling costs. Over time, rent rises while the mortgage payment stays the same, the loan shrinks, and the home's value grows, until buying overtakes.
What tips the balance
- How long you stay. The biggest factor. Buying and selling costs need years to recover.
- Rent vs the cost of owning. Compare rent with the full monthly cost of owning, not just the mortgage.
- Mortgage rate. Higher rates mean more interest and a later break-even.
- Home value growth. At 3% a year buying looks good; at 0–1% renting often wins for a decade or more.
- What renters do with the difference. The comparison assumes the renter invests it. If the extra money would just be spent, buying acts as forced saving and wins sooner.
Rent or buy: a quick checklist
Buying tends to make sense when:
- you expect to stay at least 5–7 years;
- the full monthly cost isn't far above comparable rent;
- you have the down payment, closing costs and an emergency fund;
- your job and income are stable.
Renting tends to make sense when:
- you might move within a few years;
- local prices are high compared with rents;
- you'd have to stretch your budget or empty your savings to buy.
Plan the purchase
If buying looks right, work out the price that fits your income with how much house can I afford and the cash you'll need with the closing costs calculator. Renting for now? Use the rent affordability calculator to find a comfortable rent, and invest or save the difference: our guide to CD vs high-yield savings explains where a down-payment fund belongs.
See your wealth either way
Rent or buy, what matters is your net worth growing. Summit is a net worth tracker that shows your home equity or investments, savings and debts in one view with a monthly check-in. Vault keeps your budget and goals together, and RentRoll helps if you ever rent out a property you own. Each has a free demo with sample data.
An estimate based on your assumptions. Home prices, rents and investment returns are uncertain.
Frequently asked questions
Is it better to rent or buy?
How long do I need to stay for buying to make sense?
What costs of owning do people forget?
Isn't rent just throwing money away?
What is the price-to-rent ratio?
Does the calculator include tax benefits?
Written by
Finance Specialist & Editor, VaultlyApps
Emma Whitfield writes and edits the VaultlyApps money guides and free calculators. Her focus is US household finance — budgeting on a real paycheck, paying down credit card and student debt, emergency funds and savings goals, renting — and the money side of freelancing and small-business income, from pricing and profit margins to self-employment tax. Every guide is researched against primary sources such as IRS publications and the CFPB, every number is checked in our tested calculators, and tax content is reviewed each year when new IRS figures come out. Emma is not a licensed financial adviser or tax preparer; her work is general education, not personal advice.
Researched against primary US sources, checked against independent calculators and reviewed by a finance expert on our team. Written for US readers — general education, not financial, tax or legal advice. Editorial policy · Disclaimer
