Rent vs Buy Calculator
It compares the true net cost of renting against buying over the years you actually expect to stay, counting transaction costs, maintenance, and the investment return on the deposit a renter never spends.
Over 10 years, renting costs less
$73,135
Net cost of buying
$248,168
Net cost of renting
$175,033
Total rent paid
$275,133
Home value at sale
$604,762
Equity at sale
$299,568
Renter's portfolio
$203,600
| Yr | Buying net | Renting net | Equity |
|---|---|---|---|
| 1 | $63,089 | $16,755 | $107,524 |
| 2 | $85,333 | $33,723 | $125,722 |
| 3 | $107,212 | $50,890 | $144,625 |
| 4 | $128,706 | $68,240 | $164,265 |
| 5 | $149,791 | $85,755 | $184,674 |
| 6 | $170,442 | $103,416 | $205,888 |
| 7 | $190,633 | $121,201 | $227,945 |
| 8 | $210,338 | $139,084 | $250,882 |
| 9 | $229,527 | $157,038 | $274,743 |
| 10 | $248,168 | $175,033 | $299,568 |
Assumes 3% closing costs, 6% selling costs, 1.2% property tax and $1,800 insurance a year. The answer is highly sensitive to appreciation and investment return — change each and watch it move.
What it calculates
It compares the true net cost of renting against buying over the years you actually expect to stay, counting transaction costs, maintenance, and the investment return on the deposit a renter never spends.
Why it matters
Most comparisons pit rent against a mortgage payment, which is not the comparison. Buying carries tax, maintenance, and 6–9% in transaction costs, while renting frees a large down payment to be invested.
Who it's for
Anyone deciding whether to buy, renters feeling pressure to get on the ladder, and owners wondering whether to sell and rent.
Formula
- Appreciation
- Annual growth in the home's value
- Return
- What the renter earns on the un-spent deposit
- Costs
- Closing costs on purchase, selling costs on exit
- Net cost
- Total outflow less what you recover at the end
Worked example
$2,000 rent against a $450,000 home with 20% down, held 10 years
- 1Buying: down payment, closing costs, mortgage, tax, insurance and maintenance
- 2Credit the sale proceeds after 6% selling costs
- 3Renting: escalating rent, credited the growth on the un-spent deposit
- 4Compare the two net figures
The answer flips entirely on appreciation versus investment return
How the rent vs buy calculator works
Buying is charged every cash outflow — deposit, closing costs, mortgage payments, property tax, insurance and maintenance — then credited the sale proceeds after selling costs. Renting is charged the rent, then credited the growth on the down payment and closing costs the renter never spent. That opportunity cost is what naive comparisons leave out, and it is often decisive: if a portfolio returns meaningfully more than houses appreciate, renting can stay ahead indefinitely. The gap usually widens for the first decade, because early mortgage payments are almost all interest while the renter's portfolio compounds from day one.
Buying is charged every cash outflow — down payment, closing costs, mortgage, tax, insurance and maintenance — then credited the sale proceeds after selling costs. Renting is charged the rent, then credited the growth on the down payment the renter never spent.
That opportunity cost is what naive comparisons leave out, and it is often decisive. If a portfolio returns meaningfully more than houses appreciate, renting can stay ahead indefinitely — buying does not automatically win given enough time.
Common mistakes
- Comparing rent against a mortgage payment and stopping there.
- Ignoring the 6–9% of value that buying and selling consume in fees.
- Assuming house prices only rise, and at a rate above the stock market.
- Forgetting maintenance, which runs about 1% of the home's value every year.
Tips and best practice
- Below roughly five years, transaction costs almost always make renting cheaper.
- The result is highly sensitive to appreciation and investment return — change each and watch the answer move.
- Buying buys security of tenure and freedom to alter the property, which no spreadsheet captures.
Frequently asked questions
Is it cheaper to rent or buy?
It depends on how long you stay, how fast prices rise, and what the deposit would earn invested. Short stays favor renting because of transaction costs; long stays usually favor buying unless investment returns comfortably outpace house prices.
How long do I need to stay for buying to make sense?
Commonly five years or more, because buying and selling consume roughly 6–9% of the property's value. Below that the transaction costs rarely get recovered.
Why does the calculator credit renters with investment growth?
Because a renter does not spend the deposit and closing costs. Leaving that money out of the comparison flatters buying by ignoring what the cash could have earned elsewhere.
What maintenance should I budget for?
About 1% of the home's value each year as a long-run average, more for older properties. It is lumpy — nothing for years, then a roof.
Does buying always win eventually?
No. If your portfolio consistently returns several points above house-price appreciation, renting and investing can stay ahead indefinitely. That result surprises people, which is exactly why it is worth modeling.
Related calculators
Methodology & trust
- Formula source
- Discounted cash-flow comparison including transaction costs and opportunity cost.
- Last updated
- 2026-07-28
- Privacy
- Every calculation runs in your browser. No inputs are sent to a server or stored.
- Accessibility
- Keyboard navigable, labeled inputs and WCAG AA color contrast.