Rent vs Buy Calculator
Use this calculator to compare the total costs of renting versus buying a home over a specific time period. Consider all the financial factors including upfront costs, monthly payments, taxes, maintenance, and opportunity costs to make an informed decision about whether to rent or buy.
Compare Rent vs Buy Costs
Method & sources
This calculator is educational, not advice. It estimates and compares the net cost of buying versus renting from the numbers you enter; it is not a loan offer, an investment recommendation, or financial, tax or legal advice. Confirm any figure with a licensed professional before making a decision.
- Formula
Buying side - monthly mortgage payment: Loan amount = Home price - Down payment. Monthly rate r = Annual interest rate / 100 / 12. Number of payments n = Loan term in years x 12. Payment M = Loan amount x [r(1+r)^n] / [(1+r)^n - 1]; if r = 0, M = Loan amount / n instead.
Buying side - other monthly costs: Property tax/12 + Home insurance/12 + (Home price x Annual maintenance % /100)/12 + Monthly HOA fees, all added to M to get total monthly buying cost.
Buying side - total mortgage payments over the stay = total monthly buying cost x (Years to stay x 12).
Buying side - future home value = Home price x (1 + Annual appreciation %/100) ^ Years to stay.
Buying side - remaining loan balance is walked forward month by month for the full holding period (interest = balance x monthly rate; principal = M - interest; balance -= principal, floored at zero), the standard amortisation schedule.
Buying side - equity gained = future home value - remaining loan balance at the end of the stay.
Total cost of buying = Down payment + Closing costs + total mortgage payments - equity gained. (This nets out price appreciation and principal paydown against the cash paid in, so it is a net cost, not a gross outlay - it can come out negative, meaning buying produced a net gain, in a scenario where appreciation and paydown outweigh the cash paid.)
Renting side: for each year of the stay, that year's monthly rent x 12 is added to the running total, then rent is increased by the annual rent-increase percentage for the following year (compounding). Renters insurance x years to stay is added on top.
Renting side - opportunity cost: Investment growth = Down payment x (1 + Annual investment return %/100) ^ Years to stay. Opportunity cost = Investment growth - Down payment. This is SUBTRACTED from total renting cost (renting is credited with what the down payment would have earned if invested instead of spent on a home).
Verdict: Difference = Total buying cost - Total renting cost. Difference < 0 means buying costs less ("Buying is better by $X"); Difference >= 0 means renting costs less ("Renting is better by $X").
- Rounding
- Every dollar figure shown is formatted with toLocaleString to 2 decimal places for display only; the calculation itself, including the month-by-month amortisation loop used to find the remaining balance, runs on full floating-point precision throughout.
- Inputs used
- Home price (required, must exceed $0)
- Down payment (optional, defaults to $0 if blank)
- Years you plan to stay (required, 1-30, must exceed 0)
- Annual mortgage interest rate, entered as a percentage 0-100 (required; blank or non-numeric is rejected, but 0% is accepted as a valid rate)
- Loan term in years (30, 20, 15 or 10)
- Closing costs (optional, defaults to $0)
- Annual property tax (optional, defaults to $0)
- Annual home insurance (optional, defaults to $0)
- Annual maintenance, as a percentage of home value (optional, defaults to 1% if blank)
- Monthly HOA fees (optional, defaults to $0)
- Monthly rent for a comparable property (required, must exceed $0)
- Annual rent increase percentage (optional, defaults to 3% if blank)
- Annual renters insurance (optional, defaults to $0)
- Expected annual investment return if the down payment were invested instead, as a percentage (optional, defaults to 7% if blank)
- Expected annual home appreciation percentage (optional, defaults to 3% if blank)
- What this does not account for
- Tax deductibility of mortgage interest or property tax - not modelled by the calculator. (The cited CFPB page does not itself discuss this; whether the deduction helps a given buyer depends on itemising versus the standard deduction, a general tax-law point not sourced to CFPB here.)
- The capital gains exclusion available on the sale of a primary residence in the US
- Moving costs, real estate agent commissions on a future sale, or other one-time transaction costs beyond the closing costs entered at purchase
- Lifestyle flexibility, the ability to relocate quickly, and other non-financial factors the CFPB source names as part of the decision
- Local rent-control or rent-stabilisation rules that could cap the entered annual rent increase in some jurisdictions
- PMI (private mortgage insurance) on a low down payment - not modelled on this calculator's buying side
- Volatility or risk in either the home-appreciation or investment-return assumptions - both are entered as smooth, guaranteed compounding rates with no variance modelled
- Tax on investment gains in the opportunity-cost calculation - the invested down payment's growth is credited to renting in full, pre-tax
- Jurisdiction
- United States. Cost categories (property tax, HOA, PMI-free assumption, mortgage-interest itemisation) follow US housing-finance conventions.
- Source
- Consumer Financial Protection Bureau, "Consider whether it's the right time for you to buy"
- Effective date
- Not date-sensitive: the amortisation formula and the compounding rent/appreciation/investment-return logic are stable calculation methods, not a value that changes on a schedule. Source page last modified by CFPB on 2024-12-12.
- Version
- 1.1
- Last substantive review
- 2026-09-20
- Limitations
- The interest rate, rent-increase, investment-return, maintenance and appreciation fields all have illustrative placeholder examples (6.5%, 3%, 7%, 1%, 3%) shown as grey placeholder text, not pre-filled values - the field is genuinely empty until you type a number, and the calculator quietly falls back to 1% maintenance, 3% rent increase, 7% investment return or 3% appreciation if you calculate with any of those left blank.
- CFPB's guidance is general decision-making context (equity, maintenance burden, price risk, time horizon), not a specific formula or rate the calculator implements - no regulator publishes an official rent-vs-buy formula, so this card cites the closest live, on-topic CFPB page rather than a formula source.
- The 7% default investment return and 3% default home-appreciation rate are illustrative assumptions, not published forecasts or historical averages - both are user-editable and should be treated as placeholders, not projections.
- This is a cost estimate for comparison only, not a loan offer, investment advice, or a projection of actual future home prices, rents or investment returns.
- Fixed 2026-09-21 (FCH-ISS-24): the 'Total Rent' figure in the results breakdown used to double-count renters insurance - the underlying total already included it once, and the breakdown line added it a second time on top. The headline recommendation and the buy-side totals were never affected; 'Total Rent' now correctly shows rent alone, matching the separate 'Renters Insurance' line beneath it.
- An `equityBuilt` value is computed internally but never used or displayed anywhere - leftover code with no effect on any result shown.
Reference cases
Five worked examples you can check by hand against the formula above.
Reference case 1: $300,000 home, 20% down, 6.5% rate, 30-year term, 5-year stay (the page's own placeholder example values) - buying wins
- Home price: $300,000
- Down payment: $60,000
- Years to stay: 5
- Interest rate: 6.5%
- Term: 30 years
- Closing costs: $8,000
- Property tax: $3,600/yr
- Home insurance: $1,200/yr
- Maintenance: 1%
- HOA: $0
- Monthly rent: $2,000
- Rent increase: 3%
- Renters insurance: $200/yr
- Investment return: 7%
- Appreciation: 3%
Result: Total cost of buying $74,901.92 (down payment + closing costs + $130,017.80 in mortgage/tax/insurance/maintenance payments, minus $123,115.88 of equity gained). Total cost of renting $104,266.16 (rent paid minus $24,153.10 of opportunity cost on the invested down payment). Buying is better by $29,364.24.
Reference case 2: $350,000 home, 20% down, 6% rate, 30-year term, 10-year stay, lower investment return than appreciation - buying wins by a wide margin
- Home price: $350,000
- Down payment: $70,000
- Years to stay: 10
- Interest rate: 6%
- Term: 30 years
- Closing costs: $9,000
- Property tax: $4,200/yr
- Home insurance: $1,400/yr
- Maintenance: 1%
- HOA: $0
- Monthly rent: $2,200
- Rent increase: 4%
- Renters insurance: $200/yr
- Investment return: 5%
- Appreciation: 4%
Result: Total cost of buying $87,683.51 ($292,448.98 in payments minus $283,765.47 equity gained). Total cost of renting $274,938.60. Buying is better by $187,255.10.
Reference case 3: $400,000 home, 20% down, 7% rate, 30-year term, 5-year stay, high investment return (10%) - renting wins
- Home price: $400,000
- Down payment: $80,000
- Years to stay: 5
- Interest rate: 7%
- Term: 30 years
- Closing costs: $10,000
- Property tax: $4,800/yr
- Home insurance: $1,600/yr
- Maintenance: 1.2%
- HOA: $50/mo
- Monthly rent: $2,500
- Rent increase: 2%
- Renters insurance: $250/yr
- Investment return: 10%
- Appreciation: 2%
Result: Total cost of buying $136,326.85 ($186,738.08 in payments minus $140,411.23 equity gained). Total cost of renting $108,530.40 (rent paid minus $48,840.80 opportunity cost). Renting is better by $27,796.44.
Reference case 4: $250,000 home, 20% down, 0% interest rate (the zero-rate edge case), 15-year term, 7-year stay - buying wins; buying cost comes out negative (a net gain) because appreciation plus principal paydown exceed cash paid in
- Home price: $250,000
- Down payment: $50,000
- Years to stay: 7
- Interest rate: 0%
- Term: 15 years
- Closing costs: $6,000
- Property tax: $3,000/yr
- Home insurance: $1,000/yr
- Maintenance: 1%
- HOA: $0
- Monthly rent: $1,800
- Rent increase: 3%
- Renters insurance: $150/yr
- Investment return: 7%
- Appreciation: 3%
Result: Total cost of buying -$5,968.47 (straight L/n payment division, the 0%-rate branch; $138,833.33 in payments against $200,801.80 of equity gained - a net gain, not a cost). Total cost of renting $136,270.11. Buying is better by $142,238.58.
Reference case 5: $280,000 home, $0 down payment, 6.75% rate, 30-year term, 6-year stay (no down payment means no opportunity cost credited to renting) - buying wins
- Home price: $280,000
- Down payment: $0
- Years to stay: 6
- Interest rate: 6.75%
- Term: 30 years
- Closing costs: $7,000
- Property tax: $3,360/yr
- Home insurance: $1,100/yr
- Maintenance: 1%
- HOA: $0
- Monthly rent: $1,900
- Rent increase: 3%
- Renters insurance: $180/yr
- Investment return: 7%
- Appreciation: 3%
Result: Total cost of buying $105,656.64 ($174,317.38 in payments minus $75,660.73 equity gained). Total cost of renting $148,559.75 (opportunity cost is $0.00 since there is no down payment to invest). Buying is better by $42,903.10.
Change log
| Date | Change |
|---|---|
| 2026-09-20 | Card published (T-685). Formula and all five reference cases verified against finance/mortgage/rent-vs-buy-calculator/js/rent-vs-buy-calculator.js by re-implementing its exact arithmetic (including the month-by-month amortisation loop) in Python and computing each result independently. |
| 2026-09-21 | FCH-ISS-24 fixed: the 'Total Rent' breakdown line now shows pure rent, no longer adding renters insurance a second time on top of the already-inclusive total. New Playwright test (case 3b, tests/finance-tax-retirement-correctness.spec.js) checks this line with nonzero renters insurance, which none of the five reference cases above happened to isolate. |
How to Use This Calculator
- Enter Home Details: Input the home price, your planned down payment, and how many years you expect to stay in the home.
- Add Financing Information: Include the mortgage interest rate, loan term, and estimated closing costs.
- Include Ongoing Costs: Enter property taxes, insurance, maintenance costs, and any HOA fees.
- Compare with Rental: Input the monthly rent for a comparable property, expected annual rent increases, and renters insurance costs.
- Set Investment Assumptions: Include the expected return if you invested your down payment instead, and expected home appreciation.
- Calculate and Compare: Click Calculate to see which option costs less over your planned time horizon.
Understanding the Rent vs Buy Decision
The decision to rent or buy a home involves more than just comparing monthly payments. This calculator considers the total cost of ownership including upfront costs, ongoing expenses, tax benefits, opportunity costs, and potential appreciation to give you a comprehensive comparison.
Factors Favoring Buying
- Long-term stability: Planning to stay 5+ years in the same location
- Building equity: Monthly payments build ownership rather than paying rent
- Tax benefits: Mortgage interest and property tax deductions
- Control: Ability to modify and improve your home
- Appreciation potential: Benefit from home value increases
Factors Favoring Renting
- Flexibility: Easier to move for job changes or lifestyle needs
- Lower upfront costs: No down payment or closing costs
- No maintenance responsibility: Landlord handles repairs and maintenance
- Investment opportunity: Invest down payment money in other assets
- Predictable costs: No surprise repair bills or property tax increases
Frequently Asked Questions (FAQ)
FAQ Index
- Is it better to rent or buy a home?
- What factors should I consider when deciding to rent vs buy?
- How long should I plan to stay to make buying worthwhile?
- What are the hidden costs of buying a home?
- How does the rent vs buy calculator work?
- Should I include opportunity cost in my calculation?
- What if home prices are rising rapidly in my area?
- How much should I budget for home maintenance?
- What if interest rates change after I calculate?
- Does this calculator include tax benefits?
Whether it's better to rent or buy depends on your financial situation, location, lifestyle preferences, and time horizon. Generally, buying makes more sense if you plan to stay in the same area for 5+ years, have stable income, and can afford the down payment and ongoing costs. Renting offers more flexibility and fewer upfront costs.
Key factors include: upfront costs (down payment, closing costs), monthly costs (mortgage vs rent), maintenance responsibilities, tax benefits, opportunity cost of down payment, local market conditions, job stability, and how long you plan to stay in the area.
Generally, you should plan to stay at least 3-5 years to make buying financially worthwhile. This allows time to recoup closing costs and benefit from potential home appreciation. However, the exact timeframe depends on local market conditions, closing costs, and the difference between monthly rent and mortgage payments.
Hidden costs include closing costs (2-5% of home price), property taxes, homeowners insurance, PMI if down payment is less than 20%, maintenance and repairs (typically 1-3% of home value annually), HOA fees, utilities, and the opportunity cost of your down payment.
The calculator compares the total cost of buying (down payment, closing costs, monthly mortgage payments, taxes, insurance, maintenance, minus home appreciation and tax benefits) with the total cost of renting (monthly rent, renters insurance, plus the opportunity cost of not investing your down payment) over your specified time period.
Yes, opportunity cost is important. If you rent instead of buy, you could invest your down payment in stocks, bonds, or other investments. The calculator includes this by comparing the potential returns from investing your down payment against the benefits of home ownership.
Rapid home price appreciation can favor buying, as you'll benefit from the increased equity. However, be cautious about assuming high appreciation rates will continue indefinitely. Use conservative estimates and consider that high appreciation often comes with higher purchase prices and potentially higher property taxes.
A common rule of thumb is 1-3% of your home's value annually for maintenance and repairs. Newer homes may be closer to 1%, while older homes might require 2-3% or more. This includes routine maintenance, repairs, and eventual replacement of major systems like HVAC, roof, or appliances.
Interest rate changes can significantly impact the rent vs buy decision. Higher rates make buying more expensive, while lower rates favor buying. If rates change substantially, re-run the calculation with updated rates. Consider getting pre-approved to lock in a rate if you're close to buying.
This calculator provides a simplified comparison that doesn't include specific tax benefits like mortgage interest deduction or property tax deduction. For a complete analysis including your specific tax situation, consult with a tax professional or financial advisor who can factor in your marginal tax rate and other deductions.