Compare buying vs renting.
Estimate which option may be more cost-effective over a 5-year window after accounting for mortgage payments, property costs, rent, and investment growth.
How this buy vs rent calculator helps
This comparison focuses on total 5-year cost, not just monthly payments. It helps you weigh the opportunity cost of a down payment against the flexibility and lower upfront costs of renting.
Formula: Estimated total cost = mortgage principal + interest + taxes + maintenance + closing costs − home equity growth + opportunity cost of down payment versus investing equity.
Assumptions: The estimate assumes a fixed mortgage rate, a standard 5-year horizon, and a simple investment return on the cash used for a down payment. It does not model tax law changes or neighborhood-specific costs.
Worked example: A $420,000 home with a 20% down payment, 6.5% mortgage rate, and $2,800 monthly rent may show buying is more affordable only if the homeowner plans to stay long enough to capture home equity and tax benefits.
- Home price: Purchase price of the home you are considering.
- Down payment: Cash invested upfront into the home purchase.
- Mortgage rate: Interest rate on the loan.
- Monthly rent: Current rent that could otherwise be used toward a home purchase.
- 5-year cost difference: Which option is likely cheaper over the next five years.
What the result means
The cost comparison is a 5-year planning estimate. It helps you compare the cash flow impact of ownership versus renting, but real decisions should also consider your timeline, job stability, tax situation, and local housing market.
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 costs? It includes a basic estimate of borrowing and ownership costs but not every local charge, such as title fees or lender-specific adjustments.
- Why does buying sometimes look worse in the short term? A down payment ties up cash and monthly ownership costs can be high, especially when you plan to sell before the market has time to build equity.
Why this estimate matters
Use the Compare buying vs renting. to test a realistic scenario before making a financial or health decision. The result is most helpful when you understand the inputs and how a small change in rate, payment, income, savings goal, or time horizon can change the outcome. This makes the calculator useful for planning, comparison, and early decision-making instead of relying on guesswork.
Because every household, budget, and payment schedule is different, the output should be treated as an estimate rather than a promise. Key assumptions like fixed costs, tax treatment, rate changes, or expected returns are built into the model and should be reviewed before making a commitment. When the decision is significant, compare a few scenarios, update the numbers as your situation changes, and consider professional guidance for taxes, debt strategy, mortgage planning, or long-term financial goals.
- Check your assumptions: Replace default values with your real numbers to see how the estimate changes.
- Compare scenarios: Test lower, base, and higher-cost versions of the same decision before finalizing your plan.
- Review trade-offs: A faster payoff or lower payment may affect cash flow, flexibility, or long-term goals.
- Update regularly: Revisit the tool whenever income, rates, costs, or goals change.