Rent vs Buy Calculator

Compare total housing costs of renting versus buying over your planned stay—including equity, maintenance, and opportunity cost.

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Rent vs Buy: Key Considerations

How Long Will You Stay?

Buying typically makes more sense if you'll stay 5+ years due to closing costs and transaction fees.

Opportunity Cost

Your down payment could grow if invested in the stock market instead of a home.

Hidden Costs of Ownership

Maintenance, repairs, property taxes, and insurance add 1-3% of home value annually.

Rising Rent vs Fixed Mortgage

Rent increases over time while a fixed-rate mortgage payment stays constant.

How this calculator works

Net cost of renting = rent for each year, raised by the annual rent increase, − what the down payment would have earned if invested instead. Net cost of buying = mortgage payments + property tax + insurance + maintenance + HOA + down payment − home equity (future home value − the original loan amount). The calculator favors whichever net cost is lower.

Inputs

  • Home price and down payment — upfront cash and loan size for buying.
  • Mortgage rate and term — monthly P&I for the purchase scenario.
  • Monthly rent alternative — cost of comparable rental.
  • Years planned to stay — shorter horizons usually favor renting.

Assumptions

  • Home appreciates at the entered annual rate (default modest growth).
  • Maintenance is the entered share of home value per year (default 1%).
  • Closing costs on purchase and sale are not included.

Limitations

  • Does not model tax deductions, PMI removal timing, or HOA special assessments.
  • Emotional and lifestyle factors (stability, customization) are not quantified.
  • Market timing and interest rate changes can shift breakeven quickly.

Example calculation

  1. Compare $2,000/month rent vs $350,000 home, 20% down, 7% mortgage, with the other fields left at their defaults.
  2. Monthly ownership ≈ $2,605 including taxes, insurance, maintenance.
  3. Equity buildup partially offsets higher monthly cost.
  4. At the default 5-year horizon the calculator favors renting, by about $3,665.
  5. Rerun at 7 years and renting still leads (by about $1,930); at 10 years buying leads (by about $3,989), so the two cross between 7 and 10 years with these inputs.
Result: Renting leads by about $3,665 over 5 years; buying overtakes between 7 and 10 years with these inputs

Buying builds equity but concentrates risk in one property. Renting preserves flexibility and down-payment liquidity. Your stay length is the biggest variable.

Common mistakes

Comparing rent to mortgage only

Ownership adds taxes, insurance, maintenance, and transaction costs. Use all-in monthly and total cost.

Assuming home prices always rise

Flat or declining markets extend breakeven. Stress-test with zero appreciation.

Ignoring selling costs

Agent commissions and closing fees (6–10% total) affect net proceeds when you sell within a few years.

Frequently asked questions

  • Depends on stay length, local prices, and personal finances. Short stays often favor renting; long stays may favor buying.

  • When total buying cost (net of equity) falls below cumulative rent for the same period—often 5–10 years.

  • Tax benefits vary with SALT caps and standard deduction. This calculator uses simplified totals without itemized tax modeling.

  • More down payment reduces mortgage interest but ties up cash that could earn returns elsewhere.

  • Renters can invest down-payment savings. Buying forces equity savings through mortgage principal paydown.

  • Transaction costs on a quick sale often make renting cheaper for horizons under 5 years.

Disclaimer

LeaseCraft provides document automation and general information — not legal, tax, or financial advice. Calculator results are estimates for planning only. Consult a licensed attorney, accountant, or housing counselor for advice about your situation.