Rent vs Buy Calculator
Loans & MortgagesCompare the true cost of renting and buying.
The home & your plan
Enter a home price to compare.
Advanced options
Enter a home price to compare.
How this is calculated
- 1Cash to buy = down payment + closing: $0 + $0 = $0. The renter invests that $0 instead.
- 2Each month both deploy the same cash — the cheaper option invests the difference at 0.0%/yr.
- 3Owning starts at about $0/mo (P&I + tax + insurance + upkeep + HOA); rent starts at $0/mo.
- 4After 1 yrs, selling nets $0 of home equity (value − selling costs − loan); with side investments the buyer holds $0.
- 5The renter's invested pot grows to $0. Compared side by side, Too close to call.
Net worth: buy vs. rent
Year-by-year net worth
| Year | Home value | Buy | Rent | Difference |
|---|---|---|---|---|
| Now | $0 | $0 | $0 | $0 |
| 1 | $0 | $0 | $0 | $0 |
Net worth assumes you sell that year (after 0.0% selling costs) and includes side investments. Estimates only — your market will differ.
Formulas
| Metric | Formula | Your value |
|---|---|---|
| Monthly cost to own | P&I + tax + insurance + upkeep + HOA | $0 |
| Home equity at end | Value − selling costs − loan balance | $0 |
| Net worth if you buy | Home equity + buyer investments | $0 |
| Net worth if you rent | Invested down payment + monthly savings | $0 |
| Net-worth difference | Buy net worth − rent net worth | $0 |
| Break-even year | First year buy ≥ rent | Year 0 |
Your inputs
| Input | What it is | Your value |
|---|---|---|
| Home price | Purchase price of the home | $0 |
| Down payment | Share of price paid upfront in cash | 0% |
| Monthly rent | Monthly rent for a comparable home | $0 |
| Years you'll stay | How long you plan to stay | 1 yrs |
| Home appreciation / year | Assumed yearly change in home value | 0.0% |
| Investment return | Return on cash invested instead of buying | 0.0% |
Know what this estimate is based on
- Jurisdiction
- General model; U.S.-specific rules are identified on the relevant tool
- Scope and limitations
- Educational estimate only. A lender may use different compounding, day-count, eligibility, tax, insurance, escrow, fee, or rounding rules.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the home price, down payment, mortgage rate and term, plus the monthly rent for a comparable home and how many years you plan to stay.
- 02
Open Advanced to set the assumptions that drive the result — home appreciation, rent growth, your investment return, and the ownership costs (property tax, insurance, maintenance, HOA, closing and selling costs).
- 03
Read the recommendation, the year your buying overtakes renting (break-even), the side-by-side net-worth chart and the year-by-year table.
Formula
This tool compares the two paths on net worth, not just the monthly payment. Both 'you' deploy the SAME cash each month: whoever has the lower housing cost invests the difference, and both side-portfolios grow at your investment return. The buyer also builds home equity. Buyer net worth = home sale proceeds + side investments where sale proceeds = home value − selling costs − remaining loan Renter net worth = the invested down payment, closing costs and monthly savings Every year is valued as if you sold then (selling costs included), so the break-even year is the first year the buyer's net worth catches up to the renter's. The recommendation is simply whichever net worth is higher at your time horizon.
Example
On a $500,000 home with 20% down, a 6% / 30-year loan and $2,200/month rent, buying costs more month-to-month (≈$3,400 vs $2,200) but builds equity. With 3% appreciation, 3% rent growth and a 6% investment return, renting and investing the difference stays ahead for the first several years while the buyer recovers the ~9% in closing and selling costs. Around the break-even year the lines cross; stay well past it and buying pulls ahead, while a short stay favours renting.
Definitions
- Net worth comparison
- Instead of comparing rent to a mortgage payment, this tool compares the wealth you'd hold under each path — home equity plus investments for a buyer, invested savings for a renter.
- Break-even year
- The first year the buyer's net worth catches up to the renter's. Before it renting is usually ahead; after it buying tends to win.
- Invest the difference
- The cheaper option each month invests the money it didn't spend on housing. This is what makes the comparison fair — both sides deploy the same cash.
- Home appreciation
- The assumed yearly change in the home's value. It compounds the buyer's equity (and can be negative in a downturn).
- Closing costs
- One-time fees to buy — loan, legal, inspection and transfer costs — usually a few percent of the price, paid upfront.
- Selling costs
- One-time costs to sell — agent commission and fees — often 5–6% of the sale price, which is why a short stay rarely pays off.
- Maintenance
- Upkeep and repairs. A common rule of thumb budgets about 1% of the home's value per year.
Good to know
What renting versus buying really compares
Owning a home and renting one each carry costs that are easy to overlook, so a fair comparison looks at the full picture over the years you expect to stay. Buying involves more than a mortgage payment: there is the upfront down payment, property taxes, insurance, maintenance, and closing fees, offset by the equity you build and any appreciation in the property's value. Renting is simpler month to month, but those payments build no ownership, and the cash you would have spent on a down payment can instead be invested elsewhere. The goal is to weigh the total net cost of each path rather than judging by the monthly payment alone.
Reading the break-even point
The break-even year is the point where buying stops being more expensive than renting and starts coming out ahead, mainly because upfront purchase costs take time to recover. If you expect to stay in the home well past that year, buying is more likely to pay off; if your plans are shorter or uncertain, renting often leaves you financially better off. Treat the result as a guide shaped by your assumptions about home price growth, rent increases, and investment returns, since small changes to those figures can move the break-even year noticeably.
A common pitfall to avoid
Many people compare a mortgage payment directly to rent and conclude buying is cheaper, but this skips the costs that do not show up on a monthly statement, like repairs, taxes, and the opportunity cost of a tied-up down payment. It also helps to be realistic rather than optimistic about home appreciation, as assuming aggressive price growth can make buying look better than it would in a flatter market. Revisiting the numbers with conservative assumptions gives you a more honest sense of which option suits your situation and timeline.
Why investing the difference is the fair test
The honest way to compare the two paths is to assume both versions of you spend the same amount each month and invest whatever is left over. Because owning usually costs more month to month early on, the renter has spare cash — the down payment they never made, plus the monthly gap — and putting it to work in investments is what makes renting genuinely competitive. The buyer's wealth, meanwhile, grows as the loan is paid down and the home appreciates. Comparing the two ending net worths, rather than rent against a mortgage payment, is what turns a gut feeling into a decision. It also explains a result that surprises people: when your expected investment return is higher than the home's appreciation rate, renting and investing can win even over a long horizon, because the renter's money compounds faster than the house does.
Frequently asked questions
How does the comparison work?
Both paths deploy the same cash each month: whoever has the lower housing cost invests the difference, and both portfolios grow at your investment return. The buyer also builds home equity. We then compare the net worth each path leaves you with at your time horizon — a fairer test than rent vs. a mortgage payment.
What is the break-even year?
It's the first year the buyer's net worth catches up to the renter's, valuing the home as if you sold that year (so selling costs are included). Stay past the break-even year and buying tends to win; sell before it and renting usually comes out ahead.
Why does the investment return matter so much?
When you rent you can invest the down payment, closing costs and any monthly savings. A higher return makes renting more competitive — if your investments out-earn the home's appreciation, renting and investing can beat buying even over long horizons.
Why is buying more expensive each month but still a good deal?
Part of every mortgage payment buys equity rather than disappearing like rent, and the home can appreciate. The monthly cost of owning is usually higher, but the wealth it builds is what closes — and eventually reverses — the gap.
Does a short stay change the answer?
Yes, dramatically. Closing costs to buy and selling costs to leave can total close to 9% of the price, and you need years of equity growth to earn that back. For short stays the tool will usually favour renting, and it flags when buying never breaks even within your horizon.
What isn't included?
It's a planning estimate, not tax advice. It doesn't model mortgage-interest or property-tax deductions, PMI on small down payments, rent specials, or the lifestyle value of owning. Treat the break-even year as a guide and stress-test it with more conservative appreciation and rent-growth assumptions.