This rent vs buy calculator compares your financial position after renting or buying over the years you plan to stay. It accounts for the mortgage, property tax, insurance, maintenance, closing and selling costs, home price growth, rent increases and the return you could earn by investing instead.
How the comparison works
Each month, the calculator works out the full cost of owning and the rent. Whoever spends less that month invests the difference. The renter also invests the money that would have gone into the down payment and closing costs. At the end, the buyer’s net worth is the home’s value minus the remaining mortgage and selling costs, plus any investments, and the renter’s net worth is their investment balance.
Worked example
With the default numbers (a $400,000 home, 20% down, 6.5% over 30 years, $2,200 rent, 3% yearly growth in prices and rent, and a 5% investment return), renting comes out ahead by about $12,600 after 7 years. Staying longer or a faster rise in home prices tips the result toward buying.
What usually decides the result
How long you stay matters most, because buying and selling costs are spread over more years. Home price growth, the rent-to-price ratio and the return on investments also have a large effect. Try changing them to see how sensitive the answer is.
Frequently asked questions
Are tax benefits included?
No. Mortgage interest deductions, capital gains rules and taxes on investment returns depend on your country and situation.
Is buying always better in the long run?
Not always. In areas where homes cost many times the yearly rent, renting and investing can come out ahead even over long periods.