Rent vs Buy Calculator
A fair fight between renting and buying over the years you would actually stay: interest, taxes, upkeep and selling costs against rent rises and the investing return on your down payment.
Compare net costs, not slogans
"Rent is throwing money away" ignores that interest, taxes, insurance, maintenance and selling costs are also money not coming back — in the early years they are most of a buyer's outlay. The fair comparison is net cost over the stay you actually expect: everything each path consumes, minus what each path hands back at the end.
Buy net cost = cash in + interest + taxes + insurance + upkeep − equity at sale · Rent net cost = rent paid (rising) − investment growth on the unspent down payment
Example: over a 3-year stay, buying often loses: buying and selling costs alone (about 3% in, 6% out) can exceed $30,000 on a mid-priced home before interest. Over 10 years the same costs are amortized thin and equity compounds — which is why the stay length is the loudest input on this page.
The renter's down payment is not idle
A fair fight credits the renter: the down payment and closing cash not spent on a house can be invested, and its growth is a real offset to rent. This calculator counts it. Remove that credit (set the return to 0) and you have the version landlords quote.
How this is calculated
Buying: the loan is amortized month by month; net cost = down payment + 3% buying costs + all principal-and-interest payments + taxes, insurance and maintenance over the stay − equity at the end (home value grown at your appreciation rate, minus 6% selling cost, minus the remaining balance). Renting: rent summed year by year at your increase rate, minus the growth of (down payment + buying costs) invested at your return. All assumptions are inputs — change them and watch the verdict flip: that sensitivity is the real information.
Frequently asked questions
Why does the length of stay matter so much?
Buying has heavy fixed transaction costs at both ends and slow early equity; renting has neither. Short stays cannot spread the entry and exit costs, so renting usually wins them; long stays let equity and appreciation dominate.
Is the 5% rule the same thing?
The '5% rule' (compare rent with ~5% of the home's price per year in unrecoverable costs) is a quick screen of this same arithmetic. This calculator does the full version with your numbers.
What appreciation should I assume?
Long-run US home prices have roughly tracked inflation plus a little — 3% is a neutral placeholder, not a forecast. Try 0% and 5% to see how much your verdict depends on it.
Does buying build wealth through forced saving?
Yes — principal payments are forced saving, and the net-cost figure credits them through the equity line. Disciplined renters who invest the difference can match it; the calculator's investment credit models exactly that.
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