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Housing decision calculator

Buy vs Rent Calculator – Which Option Saves More?

Compare estimated household wealth from renting or buying over your expected stay, including recurring costs, investment growth, and home equity after estimated selling costs.

How this buy vs rent calculator helps

Set the expected time in the home and compare two estimated end positions. The buyer's position includes home equity after estimated selling costs and any monthly cash-flow savings invested. The renter's position includes the down payment and estimated purchase closing costs invested, plus any monthly savings when renting costs less.

Formula: Buyer position = estimated sale price - remaining mortgage - selling costs + invested monthly cash-flow savings. Renter position = invested down payment and purchase closing costs + invested monthly cash-flow savings. Monthly housing costs include mortgage principal and interest, property tax, homeowner insurance, mortgage insurance, HOA, and maintenance.

Assumptions: Mortgage rate and housing costs remain fixed in nominal dollars; rent and home value change at the annual rates you enter. Investment returns compound monthly. The model does not include tax effects, PMI changes, repairs beyond the maintenance estimate, moving costs, or lender-specific fees.

Worked example: For a $420,000 home, a $84,000 down payment, a 6.5% mortgage rate, and $2,800 monthly rent, the result depends on the expected stay, transaction costs, local ownership expenses, and the return assumed for money kept invested. Adjust those assumptions to compare your own scenario.

  • Home price: Purchase price of the home you are considering.
  • Time horizon: Your expected years in the home, from 1 to 30.
  • Ownership costs: Enter local taxes, insurance, HOA, mortgage insurance, maintenance, and transaction-cost estimates.
  • Growth assumptions: Rent increases, home-price appreciation, and investment return are uncertain; try conservative and optimistic values.
  • Wealth difference: Estimated difference between the buyer's net sale equity and investments and the renter's investments at the selected horizon.
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What the result means

The buyer estimate combines net equity after a hypothetical sale with invested monthly cash-flow savings. The renter estimate invests the down payment and estimated purchase closing costs, along with any monthly savings when rent is below ownership costs. The first modeled year buying is ahead is not a prediction that prices or returns will follow the assumptions.

Related calculators

Mortgage affordability calculator for sizing a realistic home budget, Budget planner for combining your housing decision with a full household cash flow model.

Frequently asked questions

  • Does this include closing and selling costs? Yes. Enter estimated purchase closing costs and selling costs as percentages. Actual lender, title, transfer, and agent charges vary by location and transaction.
  • Why does buying sometimes look worse in the short term? Purchase and sale costs arrive before much principal is repaid, while a renter can keep the down payment and purchase closing-cost cash invested.
  • Does this include tax deductions or PMI changes? No. Tax treatment varies, and mortgage insurance may change when loan-to-value changes. Enter a representative monthly amount and compare scenarios.

This is a scenario estimate, not financial or tax advice. Replace the default assumptions with local quotes and test a range of growth and return assumptions.

Why the holding period changes the comparison

Transaction costs are concentrated near the start and end of ownership. A shorter stay leaves fewer payments to reduce the loan balance, while purchase closing costs and estimated selling costs still apply. With a longer stay, more principal may be repaid, but the result also becomes more sensitive to home-price growth and maintenance assumptions.

The renter's down payment is not treated as disappearing: the model gives the renter an investment account seeded with the down payment and estimated purchase closing costs. It also invests monthly differences in housing outflows for whichever path is cheaper that month. This makes the investment-return assumption important, so test more than one plausible value.

  • Use local ownership costs: Property taxes, insurance, HOA fees, and repairs can change the result substantially.
  • Try negative appreciation: A flat or declining home value is a useful stress test, not an edge case to ignore.
  • Keep assumptions comparable: The model holds owner costs flat and excludes taxes, moving costs, and major one-time repairs.

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