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Rent vs buy calculator

Your net worth renting and buying, and the year buying catches up.

Reviewed by Victor Yuki Matusita on . First published .

Your numbers stay on your device
$
$
$
years

Buying catches up in

Year9

After 10 years, buying leaves you $234,029 and renting $221,528.

The loan, the home and the market

%
years
$
$
% of value
$
%
% of value
%
%
Buying
Net worth after 10 years
$234,029
Paid for the home
$354,570
Renting
Net worth after 10 years
$221,528
Rent paid
$302,646

A ends $12,502 ahead of B after 10 years.

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Net worth by year

How to use the rent vs buy calculator

  1. Enter the home price, the rent of a similar home, your down payment and how many years to compare.
  2. Fill in the loan, the costs of owning and how you expect the home value and the rent to change.
  3. Set what your savings would earn, and read the year buying catches up with renting.
  4. Open the net worth by year, or save it as a PDF or a CSV.

How the comparison is worked out

The method

Owner cost each month = mortgage payment + tax ÷ 12 + insurance ÷ 12 + HOA + upkeep, where upkeep = value × upkeep rate ÷ 12. The cheaper path adds the difference to its savings, and both savings grow at the return ÷ 12 a month.

At the end of each year: buying = value × (1 − cost to sell) − loan balance + savings; renting = savings. Buying catches up in the first year it is worth at least as much as renting.

Assumptions

  • Each month the owner pays the loan, property tax, insurance, HOA and upkeep, and the renter pays the rent. Whichever costs less that month invests the difference.
  • The renter starts with the down payment invested. Savings earn the yearly return divided by 12 each month, rounded to the cent.
  • The home value, the upkeep and the rent change once a year by the rates you enter; tax, insurance and HOA stay at the amounts you enter.
  • Buying's net worth is the home value minus the cost to sell, minus what is still owed on the loan, plus its savings.
  • No income tax, mortgage interest deduction, capital gains tax or closing costs to buy are included.

Worked example

This is the example the calculator opens with, worked out by the same engine you use above.

You enter
Home price$400,000.00
Rent per month$2,200.00
Down payment$80,000.00
Years to compare10 years
Mortgage rate6.5%
Loan term30 years
Property tax per year$4,800.00
Home insurance per year$1,800.00
Upkeep per year1%
HOA dues per month$0.00
Home value change per year3%
Cost to sell6%
Rent increase per year3%
Return on savings per year6%
You get
Buying catches up inYear 9
Buying, net worth after 10 years$234,029.33
Renting, net worth after 10 years$221,527.54
Mortgage payment (principal and interest)$2,022.62
Paid for the home$354,569.76
Rent paid$302,646.24

After 10 years, buying leaves you $234,029 and renting $221,528.

Sources

Read the guide: Rent vs buy: when buying starts to pay off

Educational tool

This calculator is an educational tool, not financial advice. It rests on rates you choose for the years ahead, and no one knows them.

Questions about renting or buying

Why does the result change so much with the home value?

The home is most of what the owner has at the end. A point more or less of yearly change, over ten years, moves the gap more than most other fields. Try a few values.

What does "buying catches up" mean?

The first year in which selling the home and paying off the loan would leave the owner at least as much as the renter has saved. Before it, the costs of buying weigh more.

Why are taxes left out?

Mortgage interest deductions and capital gains rules depend on your own situation and change over time. The CFPB suggests asking a tax professional about them.

Does the renter really invest the difference?

The comparison is only fair if both sides keep the money they save. If the renter spent it instead, renting would do worse than shown; set the return to zero to see the cash alone.

Privacy

Your numbers stay on your device. The calculator runs in your browser, so nothing you type is sent anywhere, and the link you copy keeps the numbers after the #, a part of the address your browser never sends.