Finance & Money
Rent vs Buy Calculator
Use this rent vs buy calculator to compare the cash cost of renting with the net cost of buying over the same period.
Property tax, insurance, maintenance as percent of home price.
Lower-cost option
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- Rent cost
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- Buy net cost
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Student quick launch
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Study path
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How rent vs buy is compared
Renting has a simple cost: monthly rent times months. Buying is messier — you pay a down payment, mortgage payments, and ownership costs (taxes, insurance, maintenance), but you also build equity as the loan is paid down and the home may change in value. This calculator totals rent on one side and buying cash outflows minus estimated equity on the other, over the same time horizon.
The price-to-rent ratio
The price-to-rent ratio is a quick first check on a market. A $450,000 home versus $2,200 monthly rent ($26,400 per year) gives a ratio near 17. As a rough rule of thumb, low ratios (around 15 or below) tend to favor buying and high ratios (around 21 and above) tend to favor renting — but the ratio ignores rates, ownership costs, and how long you stay, which is why the full comparison matters.
| Side | Costs counted | Offsets counted |
|---|---|---|
| Rent | Monthly rent x months | None in this model |
| Buy | Down payment + mortgage payments + annual owner costs | Estimated equity: appreciated home value minus loan amount |
Time horizon usually decides it
- Short stays tend to favor renting: the down payment and interest-heavy early mortgage payments are spread over few months, and little equity has built up.
- Longer stays give appreciation and principal paydown more time to offset ownership costs.
- The appreciation input is an assumption, not a forecast — home values can also fall, which swings the result toward renting.
Three-year stay vs seven-year stay
Same home, same rent, same illustrative rate: over three years, buying often shows a higher net cost because upfront and interest costs dominate. Stretch the horizon to seven years and estimated equity has more time to catch up. Re-run the comparison at several horizons before drawing a conclusion.
How to use it
- Enter rent and home price.
- Enter loan assumptions and time horizon.
- Use the lower-cost result as a starting point, not the whole decision.
How to read the answer
Buying can win through equity and appreciation, but renting can win when ownership costs and interest outweigh those benefits.
Common mistakes and edge cases
- Ignoring maintenance and transaction costs can overstate buying.
- Ignoring rent increases can overstate renting.
- Time horizon matters a lot.
Worked examples
Seven-year comparison
Lower-cost option
Buying is lower by $4,590.17
Short stay
Lower-cost option
Renting is lower by $19,663.91
Frequently asked questions
Is renting throwing money away?+
No. Renting buys housing flexibility and avoids ownership risk. Buying builds equity but has costs and risk.
What is the biggest assumption?+
Time horizon, home appreciation, and ownership costs usually drive the result.
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Last updated: May 8, 2026