Rent vs Buy Calculator
Compare the long-term cost of renting and buying a home
If You Buy
$80,000
Of home value, often 1–2%
Paid when you buy
Agent fees and costs when you sell
If You Rent
Comparison
Earned on money not spent on housing
1 to 30 years
After 10 years
Buying wins by $27,821
Buying catches up with renting in year 7.
Net worth if you buy
$259,102
home equity after selling + investments
Net worth if you rent
$231,281
invested down payment and savings
Owning cost, first month
$2,848
incl. $2,023 mortgage payment
Renting cost, first month
$2,220
rent + renters insurance
Year-by-Year Comparison
| Year | Net Worth (Buy) | Net Worth (Rent) | Buy − Rent | Home Value | Mortgage Balance |
|---|---|---|---|---|---|
| 1 | $72,737 | $105,392 | -$32,656 | $414,000 | $316,423 |
| 2 | $90,174 | $118,946 | -$28,772 | $428,490 | $312,607 |
| 3 | $108,343 | $132,648 | -$24,305 | $443,487 | $308,535 |
| 4 | $127,278 | $146,484 | -$19,206 | $459,009 | $304,191 |
| 5 | $147,015 | $160,438 | -$13,423 | $475,075 | $299,555 |
| 6 | $167,591 | $174,492 | -$6,901 | $491,702 | $294,609 |
| 7 | $189,045 | $188,626 | $419 | $508,912 | $289,332 |
| 8 | $211,419 | $202,819 | $8,600 | $526,724 | $283,701 |
| 9 | $234,756 | $217,046 | $17,710 | $545,159 | $277,694 |
| 10 | $259,102 | $231,281 | $27,821 | $564,240 | $271,284 |
The highlighted row is the first year buying comes out ahead.
How the Comparison Works
Both paths spend the same amount each month. Whoever has the cheaper housing that month invests the difference, and the renter also invests the down payment and closing costs the buyer would have spent.
The buyer's net worth is the home's value after selling costs, minus the mortgage balance, plus any investments.
The Formulas
Buy NW = value × (1 − selling %) − loan balance + investments
Rent NW = invested down payment + savings
Price-to-rent = price ÷ annual rent
Income taxes, PMI and moving costs are not included.
Things to Weigh
- •Buying usually needs several years to recover closing and selling costs
- •The longer you plan to stay, the more buying tends to pay off
- •Higher investment returns favor renting; faster home price growth favors buying
- •Compare the home price with a year of rent for a similar place
- •Owning brings repairs and less flexibility; renting brings rent increases