Rent vs Buy Calculator
Whether renting or buying is cheaper depends on how long you stay: buying usually wins once you pass the break‑even point against renting. Enter your rent, home price and costs to compare the true long‑term cost of each.
Compare the true long-term cost of renting versus buying a home. See the average monthly cost of each option for every stay length from 1 to 30 years — and exactly how long you must stay before buying becomes the cheaper choice. Sometimes called a rent or buy calculator, buy vs rent calculator or rent vs own calculator, it answers the classic question: should you rent or buy? Use it as a mortgage-vs-rent comparison to see how long you must stay before buying beats renting.
Enter your home, rent and investment details, then press Calculate to see the break-even year, a full year-by-year cost table, and a buy-versus-rent cost graph.
Average monthly cost — buying vs renting
Cost breakdown by how long you stay
How the rent vs buy comparison works
The fair way to compare renting and buying is to add up every dollar each choice costs you over the years you actually stay, then divide by that time to get an average monthly cost. On the buying side the calculator adds your mortgage payments, property tax, home insurance, maintenance, HOA and the one-off buying and selling costs — then subtracts the equity you walk away with when you sell (your home's value grown by appreciation, less selling costs and any loan still owed) and the tax saving on your mortgage interest. On the renting side it adds your rent, renter's insurance and deposit as they grow each year.
Why longer stays favor buying
Buying carries heavy one-off costs — the closing costs going in and the agent and selling costs coming out. Spread over just a couple of years those costs make every month of owning very expensive, so renting usually wins for short stays. The longer you stay, the more those one-off costs are diluted and the more equity (and long-term net worth) you build, so the average monthly cost of owning falls until it drops below renting. That tipping point is the break-even year shown at the top of the results.
The cost of tied-up cash
Money you put into a down payment, closing costs or a deposit could otherwise be invested. To keep the comparison honest, the calculator charges each side the investment return it gives up on the cash it ties up, using your after-tax investment rate. That is why a bigger down payment or a higher expected investment return can shift the answer toward renting.
Estimate only — not financial advice. Results are highly sensitive to the appreciation, rent-growth, interest-rate and investment-return figures you enter. The mortgage-interest tax saving is a simplified estimate and local rules vary, so treat the output as a planning guide.
The rent vs buy formula
Here is exactly how this calculator works out the numbers — no black box. It is the standard opportunity-cost method, so the results line up closely with the mainstream rent-vs-buy tools.
The formulas behind this calculator
First, the monthly mortgage payment from the standard amortization formula:
- M — monthly mortgage payment
- P — loan amount (home price − down payment)
- i — monthly interest rate = annual rate ÷ 12
- n — number of payments = loan term × 12
Next, the opportunity cost — the after-tax return you give up on any cash tied up (down payment, deposit). Every future dollar on both sides is carried forward at this monthly rate:
- a — monthly opportunity (investment) rate
- R — annual investment return
- t — marginal tax rate (federal + state)
For each staying length N, we total the full cost of each path and turn it into an average monthly cost:
Buying's total = down payment + closing costs + every mortgage, tax, insurance, maintenance and HOA payment (each grown forward at a), minus the mortgage-interest tax saving and the equity you keep when you sell (home value after appreciation − selling costs − loan still owed). Renting's total = every rent and renter's-insurance payment plus the return given up on your deposit. The break-even year is the first year buying's average drops to or below renting's.
And the quick sanity check, the price-to-rent ratio:
In a spreadsheet the payment is =PMT(rate/12, term*12, -loan). This opportunity-cost approach is the standard way to compare renting and buying.
Rent vs buy in your city or country
The rent-versus-buy answer is local, so enter your own home price and rent rather than national averages. Expensive metros — the San Francisco Bay Area, Los Angeles, much of coastal California, and pricey cities in Canada, Australia and New Zealand — tend to have a high price-to-rent ratio, which pushes the break-even further out and often favors renting for the first several years. More affordable markets usually reward buying much sooner. The calculator is currency-agnostic: the numbers work the same whether you enter US dollars, Canadian dollars, pounds or any other currency, so you can use it wherever you live. When buying comes out ahead, size the loan with the mortgage calculator and check your budget with the home affordability calculator.
How to use it & key terms
Enter your rent, a home price and the costs of buying, choose how long you'll stay, then press Calculate to see which works out cheaper per month.
| Term | What it means |
|---|---|
| Break-even point | The number of years after which buying beats renting. |
| Equity | The part of the home you own as you repay and prices rise. |
| Closing costs | One-off buying costs (fees, taxes) that renting avoids. |
| Opportunity cost | What your down payment could have earned if invested instead. |
| Appreciation | The rate a home's value grows each year. |
| Maintenance | Ongoing upkeep an owner pays but a renter doesn't. |
Sources & methodology
For every staying length from 1 to 30 years we total the real cost of each path and express it as an average monthly cost. Buying includes mortgage principal and interest, property tax, insurance, maintenance, HOA and buying and selling costs, offset by the sale equity after appreciation and by the mortgage-interest tax saving; renting includes rent, renter's insurance and the deposit. The mortgage-interest tax saving is applied only while your itemized deductions — mortgage interest plus property tax up to the $10,000 SALT cap — exceed the standard deduction for your tax filing status, so the filing status can change later-year costs. Cash tied up on either side is charged the after-tax investment return it forgoes, and future amounts are compared on a like-for-like, time-value basis.
Sources: Standard mortgage amortization; time-value-of-money and opportunity-cost comparison.
Beyond the payment: the real cost of owning
Comparing a mortgage payment with a rent cheque understates the true cost of ownership, because a home carries expenses a tenant never sees. Getting the decision right means counting all of them, not just the loan.
The most overlooked are transaction costs, and they land at both ends. Buying involves closing costs, lender fees and inspections; selling later means an agent's commission, possible concessions and moving expenses. Together these can consume a meaningful slice of the price, and they are the main reason a short stay favors renting — you may not own long enough for appreciation and equity to outrun the cost of getting in and back out. Spread across just a few years, those one-off fees dominate; spread across a decade, they fade.
Then come the ongoing costs that rent bundles invisibly. As an owner you pay property tax, homeowners insurance, any HOA dues, and — the one people forget — maintenance. Roofs, water heaters, appliances and paint all wear out on the owner's dime, and a common planning rule sets aside a small percentage of the home's value each year for upkeep. A tenant simply calls the landlord; an owner writes the cheque. These recurring costs, not the mortgage alone, are what the calculator above folds into the comparison.
There is also a cost that never appears on a statement: flexibility. Renting lets you move for a job, a relationship or a change of heart with little more than a notice period, while owning ties you to a place and a selling process. Set against that is the stability of a fixed housing cost, protection from rent increases, and the freedom to renovate. None of this means buying is worse; it means the fair comparison is total cost against total cost over the years you will actually stay. Once taxes, insurance, upkeep, transaction fees and the return you forgo on your down payment are all included — as they are here — the break-even year tells the real story: stay past it and buying tends to win, fall short and renting is usually the cheaper, more flexible choice.
Frequently asked questions
Is it better to rent or buy a home?
It depends mostly on how long you will stay. This tool works out the average monthly cost of each option for every stay length and shows the break-even year — stay longer than that and buying is cheaper, shorter and renting wins.
How does this rent vs buy calculator work?
For each staying length from 1 to 30 years it totals every cost of owning (mortgage, tax, insurance, upkeep, buying and selling costs, minus sale equity and the mortgage-interest tax saving) and of renting (rent, insurance, deposit), then divides by the time to give an average monthly cost for both.
Should I rent or buy?
There is no single right answer — it turns on how long you will stay, the price compared with local rent, your mortgage rate and what you could earn investing your down payment instead. Enter your numbers and the calculator shows the break-even year: plan to stay longer and buying usually wins, plan to move sooner and renting is typically cheaper.
How do I calculate rent vs buy?
Add up the full cost of each path over the years you will stay — for buying that is the mortgage, taxes, insurance, upkeep and buying and selling costs, minus the equity you keep and the mortgage-interest tax saving; for renting it is rent, insurance and deposit — then divide each by the number of months to compare a mortgage versus rent on a like-for-like average monthly basis. This calculator does all of that for you.
When is renting better than buying?
Renting usually wins when you might move within a few years, when the price-to-rent ratio is high (an expensive market), when mortgage rates are high, or when you could earn a strong return investing your down payment instead. For longer stays in more affordable markets, buying tends to come out ahead.
What is the break-even point for buying?
The number of years you need to stay before buying becomes cheaper than renting. Before that point the large one-off buying and selling costs keep renting ahead; after it, ownership pulls in front.
Why does it include an investment return?
Cash used for a down payment, closing costs or a deposit could otherwise be invested. The calculator charges each option the after-tax return it gives up on the money it ties up, so the comparison is fair.
Does buying always win if I stay long enough?
Usually, but not always. A high price compared with rent, weak home appreciation, high ownership costs or a strong investment return can keep renting cheaper even over 30 years.
What does the tax filing status change?
It sets your standard deduction. The mortgage-interest tax saving only helps while your itemized deductions — mortgage interest plus property tax up to the SALT cap — are larger than that standard deduction, so a bigger standard deduction such as married filing jointly makes the saving fade sooner in later years.
What is the price-to-rent ratio?
It is the home price divided by one year of rent. As a rough guide a ratio under 15 tends to favor buying, 15 to 20 is balanced, and over 20 favors renting. We show it with your result as a quick sanity check, but the full answer still depends on your mortgage rate, how long you stay and what you could earn investing instead.
What is the 5-year rule for buying a home?
The “5-year rule” is a rough guideline that you should plan to stay in a home for at least five years for buying to beat renting, because the upfront buying and selling costs take time to recover. This calculator replaces the rule of thumb with your actual numbers and shows your real break-even year, which may be more or fewer than five years.
Is this financial advice?
No — it is an estimate based on the figures you enter. The mortgage-interest tax saving is simplified and local rules vary, so treat the result as a planning guide, not advice.