Rent vs Buy Calculator

What this calculator is, and when to reach for it

Almost every comparison of renting and buying is really an argument in disguise. "Rent is dead money" and "buying is a trap" are both slogans, and both survive because the honest answer depends on assumptions that people rarely state and cannot verify in advance.

This calculator takes a narrower and more useful approach. Over a period you choose, it totals what each path costs in cash, credits the buyer with what they would walk away with after selling, and reports the difference. It does not tell you which is better in general, because there is no such answer.

What it does do is make the assumptions visible and let you move them. Change the rent growth, the property appreciation, or the return a renter earns on the cash a buyer ties up, and the answer moves — sometimes reversing entirely on a single input.

Reach for this page when you are weighing a specific purchase against a specific rent, when you want to know how long you would need to stay for buying to make sense, or when you want to test how much your answer depends on assumptions you cannot control.

The two costs nobody counts

On the buying side, the costs of owning rather than borrowing: property tax, insurance, maintenance, and any service charges. These are recurring, they rise over time, and they are entirely absent from the mortgage payment that buyers usually compare against rent.

On the renting side, the return on capital a renter keeps. A buyer commits a deposit and closing costs, and that money is unavailable for anything else. A renter who invests it earns something on it, and ignoring that quietly hands the comparison to buying.

This calculator counts both, and the ownership costs are optional fields precisely because leaving them blank is the most common way a rent-versus-buy comparison is distorted. Blank means zero, and zero means buying looks better than it is.

Where to go next

To build the buying side properly, the mortgage calculator gives the payment including tax and insurance, the down payment calculator and closing costs calculator establish the cash required, and the home affordability calculator checks the price is realistic at all.

To see what a buyer would actually own at the end of the horizon, use the amortization calculator for the balance and the home equity calculator for the position after costs.

To price the renting side’s opportunity cost honestly, the investment return calculator shows what the deposit might have become, and the compound interest calculator illustrates the same mechanics on regular contributions.

How the comparison is worked out

Both paths are run forward year by year over your horizon, and the totals are set against each other.

buying cost = payments + ownership costs + buying costs + selling costs − equity at end  |  renting cost = rent paid − investment growth on the buyer’s tied-up cash

ownership costs

tax, insurance, upkeep, and dues, each grown from the home value

equity at end

the projected value less the outstanding balance

selling costs

the share of value consumed by exiting, applied to the buying side

Why ownership costs grow with the home

Property tax, insurance, and maintenance are worked out each year as a percentage of that year’s home value, so if the property appreciates, those costs rise with it. Association dues are treated as a flat monthly figure, and all of them can be escalated further by a cost-inflation percentage you enter.

This matters because it removes a common asymmetry. A comparison that grows rent at three percent a year while holding ownership costs flat has stacked the deck, and over a long horizon that single inconsistency can decide the outcome.

Why selling costs belong to the buyer

A buyer only realises their equity by selling, and selling consumes a meaningful share of the value in agency fees, legal work, and sometimes tax. Comparing gross equity against rent paid would credit the buyer with money they cannot actually access.

The effect is largest over short horizons, because selling costs are incurred once regardless of how long you owned. It is the main reason buying and selling within a few years so rarely comes out ahead.

The renter’s investment return is the decisive input

A buyer ties up a deposit and closing costs. If you enter a return, that capital is grown at your rate and credited to the renting side, on the reasoning that a renter genuinely could have invested it.

Leave it blank and the calculator treats the money as earning nothing, which is a real assumption rather than a neutral one. As the worked example shows, this single field can reverse the entire conclusion, so decide deliberately whether to fill it rather than skipping past it.

What no model can settle

Every projection here rests on assumptions about appreciation, rent growth, and investment returns over years. None of them are knowable, and small differences compound into large ones.

Treat the output as a way of testing how sensitive your answer is rather than as a prediction. If buying wins under every plausible assumption, that is genuinely informative. If it wins only under optimistic appreciation, that is informative too — it tells you the case depends on something you do not control.

What this page assumes

The calculator projects the cash you would pay as rent, growing it each year by the rent increase you entered, and the cash you would pay as mortgage payments over the same years. On the buying side it also adds the down payment, any closing costs to buy, and each ownership cost you entered, then takes off what is left after selling the home at the projected value.

Property tax, insurance, and upkeep are worked out each year from the home value for that year, so they grow with the home. HOA is a flat monthly figure. All four can also be raised each year by the cost-rise percentage you enter. If you enter a return for the renter, the cash a buyer ties up in the down payment and closing costs is grown at that rate and credited to the renting side. Anything you leave blank counts as zero. It still leaves out tax deductions and mortgage insurance.

Worked examples, step by step

Take a 400,000 property with 80,000 down at 6.5% over 360 months, compared against 2,000 a month rent rising 3% a year, over a seven-year horizon. Assume 3% appreciation, 6% selling costs, 12,000 of buying costs, and ownership costs of 1.1% property tax, 0.5% insurance, and 1% upkeep.

The two paths over seven years

Buying comes out ahead by 15,410.19 over seven years — a real but modest margin on a 400,000 purchase, and one that would be erased by a single bad assumption.

Look at the ownership costs line: 79,689.61 across seven years, split roughly 33,700 of property tax, 15,300 of insurance, and 30,600 of upkeep. That is nearly 950 a month of costs that exist on the buying side and appear nowhere in the mortgage payment. A comparison that omitted them would have shown buying ahead by over 95,000.

The one input that reverses the answer

Now credit the renter with a 6% return on the cash a buyer ties up — the 80,000 deposit and 12,000 of buying costs. Nothing else changes.

The result flips from buying ahead by 15,410.19 to renting ahead by 30,923.79, a swing of 46,334. The same property, the same rent, the same seven years, and the opposite conclusion — produced entirely by whether a buyer’s tied-up capital is assumed to earn nothing or something.

What to take from that

Not that renting is better, but that this comparison is far less robust than the confident version of the argument suggests. The answer is genuinely sensitive to an assumption nobody can verify in advance.

The practical use is to find where your own answer flips. If buying wins even when you credit the renter with a realistic return and use conservative appreciation, the case is solid. If it only wins when the deposit is assumed to earn nothing, you have learned something important about how much the conclusion is doing on its own.

The vocabulary, on and around this page

Comparison horizon

The number of years over which both paths are totalled. Short horizons favour renting because buying and selling costs are incurred once.

Total cost to buy

Payments, ownership costs, buying costs, and selling costs, less the equity the buyer walks away with at the end.

Total cost to rent

Rent paid across the horizon, less any investment growth credited on the capital a buyer would have tied up.

Net benefit to buying

The difference between the two totals. A positive figure favours buying and a negative one favours renting.

Ownership costs

Property tax, insurance, maintenance, and association dues. Recurring, growing, and absent from the mortgage payment.

Selling costs

Agency, legal, and sometimes tax charges on exit, expressed as a share of value and applied to the buying side.

Buying costs

One-off charges to complete the purchase. They are cash the buyer commits and cannot invest.

Tied-up capital

The deposit and buying costs a purchaser commits. Whether it is assumed to earn a return frequently decides the comparison.

Renter investment return

The rate at which a renter is assumed to grow the capital a buyer would have committed. The single most decisive input.

Opportunity cost

The benefit given up by choosing one path. Here it is what a buyer’s deposit could have earned elsewhere.

Appreciation

The assumed annual rise in property value. It raises the buyer’s ending equity and their ownership costs simultaneously.

Rent inflation

The assumed annual rise in rent. Growing it while holding ownership costs flat is the most common way comparisons are skewed.

Cost inflation

An optional annual escalation applied to ownership costs on top of any growth from the home’s value.

Ending equity

The projected property value less the outstanding balance at the end of the horizon, before selling costs.

Break-even horizon

The number of years at which buying stops losing to renting. Found by adjusting the horizon until the net benefit turns positive.

Transaction friction

The combined cost of buying and selling. It is why short ownership periods so rarely favour purchasing.

Imputed rent

The value of living in a home you own rather than renting it. Implicit in this comparison rather than stated separately.

Sensitivity

How much the answer moves when an assumption changes. Testing it matters more than any single result.

Maintenance rate

Annual upkeep expressed as a percentage of home value, a common convention since repair costs scale with the property.

Flexibility value

The worth of being able to move without selling. Real, decision-relevant, and impossible to put in a spreadsheet.

Common mistakes, and what this page will not do

• Comparing rent against the mortgage payment alone. Ownership costs totalled 79,689.61 over seven years in the example — nearly 950 a month absent from the payment.
• Letting blank fields decide the answer. Unfilled ownership costs count as zero, and omitting them would have shown buying ahead by over 95,000 rather than 15,410.19.
• Assuming the buyer’s deposit earns nothing. Crediting a 6% return to the renter flipped the example from buying ahead by 15,410.19 to renting ahead by 30,923.79.
• Growing rent but not ownership costs. That asymmetry alone can decide a long comparison. Both sides should escalate on consistent assumptions.
• Forgetting selling costs. Equity is only realised by selling, and exit charges consume a share of value regardless of how long you owned.
• Using a short horizon and expecting buying to win. Buying and selling costs are incurred once, so brief ownership periods rarely recover them.
• Treating optimistic appreciation as neutral. A case that only works under strong price growth depends on something you do not control. Test a conservative figure too.
• Reading the output as a prediction. Every figure rests on multi-year assumptions that cannot be verified. The value is in testing sensitivity, not in the number.
• Ignoring what the model cannot price. Flexibility, security of tenure, and the freedom to alter your own home are decision-relevant and appear nowhere in the arithmetic.

What this calculator leaves out: This calculator does not model tax deductions or reliefs, mortgage insurance, rent controls, moving costs, or the value of flexibility and security of tenure. Anything left blank counts as zero, and leaving the ownership cost fields blank tilts the comparison toward buying. Every projection rests on assumptions you supply about appreciation, rent growth, and returns.

Frequently asked questions