Compare the long-term net worth of buying a home versus renting and investing the difference.
Buying
Renting
Comparison
| Year | Buyer net worth | Renter net worth | Buyer − Renter |
|---|---|---|---|
| 1 | $70,856.72 | $104,085.33 | −$33,228.61 |
| 2 | $86,291.38 | $116,304.10 | −$30,012.72 |
| 3 | $102,330.18 | $128,646.58 | −$26,316.40 |
| 4 | $119,000.68 | $141,101.89 | −$22,101.21 |
| 5 | $136,331.92 | $153,657.99 | −$17,326.07 |
| 6 | $154,354.49 | $166,301.53 | −$11,947.04 |
| 7 | $173,100.59 | $179,017.76 | −$5,917.17 |
| 8 | $192,604.18 | $191,790.48 | +$813.71 |
| 9 | $212,901.06 | $204,601.87 | +$8,299.18 |
| 10 | $234,028.95 | $217,432.44 | +$16,596.51 |
Buyer net worth = home value after selling costs − loan balance. Renter invests the down payment, closing costs and any monthly savings versus owning. Taxes and deductions are not modeled.
Please do not make financial decisions based on these results.
What is the Rent vs. Buy Calculator?
A rent vs. buy calculator compares the long-term wealth you build by owning a home with the wealth you could build by renting and investing your savings.
Understanding home financing
Buying or financing a home involves a handful of numbers that interact: the price, the down payment, the interest rate, the loan term and the ongoing costs of ownership. The mortgage calculator combines them into a monthly payment, while the amortization calculator shows how each payment is split between interest and principal.
Costs beyond the loan
Property taxes, homeowners insurance, mortgage insurance, association dues and maintenance all add to the monthly cost of owning. Lenders also look at your debt-to-income ratio and your savings, so check what you can afford with the house affordability calculator before you start house hunting.
Changing the loan later
Once you own, you may want to lower the rate, shorten the term or borrow against your equity. The refinance calculator and the mortgage payoff calculator help you compare those choices with the loan you already have.
How to use the Rent vs. Buy Calculator
- Enter your numbers. The inputs are Home price ($), Down payment (%), Mortgage rate (%), Loan term (years), Closing costs (% of price), Property tax (% of value per year), Home insurance ($ per year). Use figures from a lender quote or your tax bill where you have them, and keep the term and rate realistic. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Buying comes out ahead after 10 yrs, and the cards below show Break-even year, Mortgage payment (P&I), Starting rent. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Rent vs. Buy Calculator using the default values shown in the calculator above:
Inputs
| Home price ($) | 400,000 |
|---|---|
| Down payment (%) | 20 |
| Mortgage rate (%) | 6.5 |
| Loan term (years) | 30 |
| Closing costs (% of price) | 3 |
| Property tax (% of value per year) | 1.1 |
| Home insurance ($ per year) | 1,500 |
| Maintenance (% of value per year) | 1 |
| Home price growth (% per year) | 3 |
| Selling costs (% of sale) | 6 |
| Monthly rent ($) | 2,300 |
| Rent increase (% per year) | 3 |
| Renters insurance ($ per month) | 15 |
| Investment return on savings (% per year) | 6 |
Results
| Buying comes out ahead after 10 yrs | +$16,596.51 |
|---|---|
| Break-even year | Year 8 |
| Mortgage payment (P&I) | $2,022.62 |
| Starting rent | $2,315.00 |
With these inputs the calculator returns Buying comes out ahead after 10 yrs: +$16,596.51. Change any value in the calculator to see how the result moves.
What the results tell you
The results panel of the Rent vs. Buy Calculator reports Buying comes out ahead after 10 yrs, break-even year, mortgage payment (p&i) and starting rent. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Tips for better results
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
What changes the result most?
Home price growth, your investment return and how long you stay.
Is buying always better than renting?
No. In high-price markets, or if you may move soon, renting and investing can come out ahead. The break-even year shows when buying wins.
How much house can I afford?
A common rule is to keep housing costs under about 28% of gross income and total debt under 36%. The House Affordability Calculator applies those limits to your numbers.
Are property tax, insurance and PMI included?
Yes, this calculator includes property tax and home insurance. Enter your own local figures because they vary by county, insurer and lender.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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