Rent vs Buy Calculator
Compare the total cash outlay of renting versus buying over a holding period, including down payment, mortgage, and ongoing ownership costs.
How to use this tool
- Enter the home price and your planned down-payment percentage.
- Enter the mortgage rate and term.
- Add your other monthly ownership costs (tax, insurance, HOA, upkeep).
- Enter the monthly rent for a comparable place.
- Set how many years you plan to stay and read which option costs less.
Should you rent or buy? This calculator compares the total cash you'd spend on each over the years you plan to stay, so you can see which is cheaper on a straight-cash basis.
Formula
The monthly cost to buy is the mortgage payment plus other ownership costs:
P&I = Loan × r ÷ [1 − (1 + r)−n], with r the monthly rate and n the months.
Monthly buy cost = P&I + Other monthly cost
Total buy = Down payment + Monthly buy cost × (Years × 12)
Total rent = Monthly rent × (Years × 12)
How it works
The rent-versus-buy decision turns on how long you stay. Buying carries large upfront costs (the down payment) and ongoing costs beyond the mortgage — property tax, insurance, HOA, and maintenance — while renting spreads cost evenly with no upfront equity stake. Over a short horizon the upfront costs of buying often dominate; over a long horizon, ownership tends to win.
This calculator compares total cash outlay over your stated holding period. It computes the mortgage principal and interest, adds your other monthly ownership costs, and multiplies by the months you plan to stay, then adds the down payment. Rent is simply monthly rent times the same number of months.
For a transparent, deterministic comparison the model holds rent flat and does not credit home appreciation, equity build-up from principal paydown, tax deductions, or rent inflation — each of which shifts the answer. Buying generally looks better than this simple cash comparison suggests because you recover equity and appreciation at sale. Use this as a baseline, then layer in those factors for your situation.
Worked example
$400,000 home, 20% down, 6% / 30 yr, vs $2,600 rent over 7 years
- Down payment = $400,000 × 20% = $80,000; loan = $320,000.
- P&I at 6% over 30 yr on $320,000 = $1,918.56.
- Monthly buy cost = $1,918.56 + $400 other = $2,318.56.
- Total buy over 7 yr = $80,000 + $2,318.56 × 84 = $274,759.18.
- Total rent = $2,600 × 84 = $218,400; renting costs less over this horizon.
Renting is cheaper | Monthly cost to buy $2,318.56 | Total buy $274,759.18 | Total rent $218,400.00
Total rent paid over 5 years (no rent growth)
| Monthly rent | Annual rent | 5-year rent |
|---|---|---|
| $1,500 | $18,000 | $90,000 |
| $2,000 | $24,000 | $120,000 |
| $2,500 | $30,000 | $150,000 |
| $3,000 | $36,000 | $180,000 |
Key terms
- Holding period
- How long you expect to own (or rent) before selling or moving — the single biggest driver of the rent-vs-buy answer.
- Principal and interest (P&I)
- The portion of a mortgage payment that repays the loan plus interest, excluding taxes, insurance, and HOA.
- Equity
- The share of the home you own outright — value minus loan balance — which grows as you pay down principal and the home appreciates.
- Total cost of ownership
- All cash spent to own over a period: down payment, mortgage, taxes, insurance, and upkeep.
Frequently asked questions
- Is it cheaper to rent or buy?
- It depends mostly on how long you stay. Buying has high upfront costs, so renting is often cheaper over a few years, while buying tends to win over longer horizons once equity and appreciation are counted. This tool compares straight cash outlay; add equity and appreciation for a full picture.
- What costs does buying include here?
- The down payment plus the monthly mortgage principal and interest and your other ownership costs (property tax, insurance, HOA, and maintenance) over your holding period. It does not subtract the equity or appreciation you recover at sale.
- Why might buying actually be better than this shows?
- This is a cash-only comparison. When you sell, you recover your equity and any appreciation, which this baseline ignores. Tax deductions on mortgage interest can also lower the true cost of buying.