Rent vs Buy Calculator
The rent-versus-buy decision is a wealth comparison, not just a monthly payment comparison. This calculator models both paths over your planned time horizon and shows which leaves you with more money.
How this calculator works
The buyer puts down a down payment, pays principal and interest, property tax, insurance, and maintenance each month, and builds equity as the home appreciates. The renter invests the down payment and the monthly savings (the owner's costs minus rent) at the investment return you choose. After your time horizon, the calculator compares the buyer's home equity against the renter's invested portfolio — the larger position wins. Selling costs and the mortgage interest tax deduction are not included, so the real outcome for a specific home will differ.
Frequently asked questions
Why does the calculator say renting wins for short horizons?
Buying has heavy upfront costs — down payment plus closing costs — and the early years of a mortgage go mostly to interest, not equity. Over a 2–5 year horizon, the renter's invested savings often outgrow the buyer's equity. Historically, buying tends to win over horizons of about 5–7 years or more, depending on the assumptions.
What if home prices and rent both grow 3%?
Then the gap is driven by everything else: the mortgage rate, maintenance, taxes, and the renter's investment return. Rising values help the buyer most when they outpace the renter's return — which is why the investment return assumption matters as much as appreciation.
What am I missing with these assumptions?
The calculator ignores selling costs (agent commissions often run 5–6%), the mortgage interest and property tax deductions, PMI when the down payment is under 20%, HOA fees, and the value of a fixed housing payment. Adjust the inputs — especially the time horizon and investment return — to your real situation.
Disclaimer: Results are estimates for general information only and do not constitute financial, tax, or legal advice. Figures reflect 2026 rules and may change. Always confirm current limits and consult a qualified professional before making decisions. Official figures: IRS.gov · 2026 limits per IRS tax inflation adjustments.