Rent vs Buy Calculator
Free Rent vs Buy Calculator compares homeownership versus renting over decades. Model home price, mortgage, rent growth, and investment returns to see which path builds more net worth. Break even analysis included.
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How It Works
Enter home price, down payment, mortgage rate and term, property tax, maintenance, appreciation, monthly rent, rent growth, insurance, expected investment return, and projection years. Use local median home price and current rental listings for realistic inputs. Maintenance at 1% of home value is common for newer homes; older properties may need 2% or more. PMI adds to buyer cost until 20% equity but is not modeled separately here. PMI until twenty percent equity is not modeled separately: add to monthly buyer cost mentally if down payment is below threshold. Rent growth above inflation in tight markets accelerates renter path cost: use local listing trend data. PMI until twenty percent equity is not modeled separately: add to monthly buyer cost mentally if down payment is below threshold. Rent growth above inflation in tight markets accelerates renter path cost: use local listing trend data.
Compare net worth over time, break even year, and 10/20/30 year total net worth for buying versus renting. See which path builds more wealth at each horizon. Run the model at 0%, 3%, and 5% appreciation to bracket uncertainty. Pair with GeoArbitrage if relocation could change both housing cost and investment return assumptions. Include opportunity cost of down payment tied up in illiquid home equity versus liquid index funds. Opportunity cost of down payment in renter path uses same return as surplus investing: conservative planners lower both. Run projection at zero three and five percent appreciation to bracket home price uncertainty over thirty years. Break even year is first year buyer net worth exceeds renter net worth in model. Opportunity cost of down payment in renter path uses same return as surplus investing: conservative planners lower both. Run projection at zero three and five percent appreciation to bracket home price uncertainty over thirty years. Break even year is first year buyer net worth exceeds renter net worth in model.
Test your assumptions with conservative and optimistic scenarios. Compare break even year across different mortgage rate and appreciation assumptions. Run sensitivity on rent growth and investment return.
Use Rent vs Buy Calculator whenever inputs change: after market moves, new contributions, or revised personal assumptions. Bookmark the page for quick reruns without installing software.
Step by step
- Enter home price, mortgage, and property costs
- Enter rent, rent growth, and investment return
- Review net worth comparison and break even year
Worked example
Example scenario for Rent vs Buy Calculator: 1%, 2%, 20%. Enter those values above to reproduce the walkthrough described in How it works.
Adjust one input at a time to see sensitivity. Rent vs Buy Calculator updates instantly so you can stress test optimistic and conservative assumptions before acting.
When to use this calculator
Reach for Rent vs Buy Calculator when compare homeownership vs renting over decades.. It suits quick what if analysis before trades, allocation changes, or plan updates.
Pair with related tools when the decision spans taxes, liquidity, or multi year projections beyond what one formula captures.
Common mistakes
Copying outputs without checking input units or stale market prices is a frequent error with Rent vs Buy Calculator. Confirm tickers, percentages, and dates before acting.
Running a single baseline scenario ignores tail risks. Stress test with conservative inputs and compare against related tools listed below when the decision is material.
The Formula
Net Worth Buy = Home Price × (1 + Appreciation)^Year - Remaining Loan Balance. Net Worth Rent = Down Payment × (1 + Invest)^Year + Monthly Diff Invested × Compound Factor. Break even when Buy > Rent.
Projects net worth for both paths including appreciation, investment returns, rent increases, taxes, and maintenance. Excludes transaction costs, HOA fees, renovation, and tax benefits of mortgage interest deduction. Treat as a long horizon planning tool. Mortgage interest deduction benefit not modeled: itemizers in high tax states may see buyer path improve slightly. Closing costs at buy and sell omitted: add two to five percent round trip mentally for short horizons. Property tax cap rules in some US states limit tax growth: use local effective rate not purchase price times rate. Transaction costs at buy and sell omitted: add two to five percent for short hold periods. Mortgage interest deduction benefit not modeled: itemizers in high tax states may see buyer path improve slightly. Closing costs at buy and sell omitted: add two to five percent round trip mentally for short horizons. Property tax cap rules in some US states limit tax growth: use local effective rate not purchase price times rate. Transaction costs at buy and sell omitted: add two to five percent for short hold periods.
Limitations and assumptions
Projects net worth for both paths including appreciation, investment returns, rent increases, taxes, and maintenance. Excludes transaction costs, HOA fees, renovation, and tax benefits of mortgage interest deduction. Treat as a long horizon planning tool. Mortgage interest deduction benefit not modeled: itemizers in high tax states may see buyer path improve slightly. Closing costs at buy and sell omitted: add two to five percent round trip mentally for short horizons. Property tax cap rules in some US states limit tax growth: use local effective rate not purchase price times rate. Transaction costs at buy and sell omitted: add two to five percent for short hold periods. Mortgage interest deduction benefit not modeled: itemizers in high tax states may see buyer path improve slightly. Closing costs at buy and sell omitted: add two to five percent round trip mentally for short horizons. Property tax cap rules in some US states limit tax growth: use local effective rate not purchase price times rate. Transaction costs at buy and sell omitted: add two to five percent for short hold periods. Rent vs Buy Calculator does not replace personalized advice. Fees, slippage, account specific rules, and behavioral constraints may change real world outcomes.
Key terms
- How is the mortgage payment calculated
- Monthly mortgage = P × r × (1+r)^n / ((1+r)^n - 1) with r = annual rate / 1200 and n = term months.
- What costs does the model account for
- Buying builds equity in an appreciating asset but ties up a down payment and incurs mortgage, tax, and maintenance costs.
- Model assumption
- Break even year is the first year where net worth from buying exceeds net worth from renting.
Compare alternatives
Mortgage Refinance Break Even helps if you already own and wonder about rate changes. Use those calculators when rent vs buy calculator alone does not capture the full decision.
Internal links on portfolios.tools help you chain calculators: run Rent vs Buy Calculator first, then validate edge cases with a specialized tool from the related section below.
FAQ
How is the mortgage payment calculated?
Monthly mortgage = P × r × (1+r)^n / ((1+r)^n - 1) with r = annual rate / 1200 and n = term months. Loan balance at any month uses amortization formula: P(1+r)^m - PMT((1+r)^m - 1)/r. Property tax and insurance are included as annual costs. Home value grows at your appreciation assumption each year. Closing costs at purchase are not modeled in net worth but reduce initial renter investment if you include them. Mortgage amortization builds equity while renter path invests down payment plus monthly surplus at market return. Renter path invests down payment and monthly cost surplus at your market return assumption. Mortgage amortization builds equity while renter path invests down payment plus monthly surplus at market return. Renter path invests down payment and monthly cost surplus at your market return assumption.
What costs does the model account for?
Buying builds equity in an appreciating asset but ties up a down payment and incurs mortgage, tax, and maintenance costs. Renting keeps cash invested in markets with no property obligations. The model includes mortgage principal and interest, property tax, maintenance as a percent of home value, homeowners insurance, and rent with annual growth. Renter surplus is invested at your market return assumption. Transaction costs at purchase and sale are not modeled but typically favor renting in short hold periods. Renter invests down payment and monthly surplus at same return assumption as buyer equity growth rate. Renter invests down payment and monthly surplus at same return assumption as buyer equity growth rate.
How is break even determined?
Break even year is the first year where net worth from buying exceeds net worth from renting. Net worth buying = home value minus loan balance. Net worth renting = down payment invested plus surplus saved monthly if renting costs less. In hot markets with low appreciation and high rent growth, break even can exceed 10 years. In high appreciation markets buying may win within 3 to 5 years. HOA fees and special assessments are not included but reduce buyer net worth if added to maintenance. Break even beyond ten years often favors renting plus investing in high price to rent metros with modest appreciation. Break even beyond ten years often favors renting plus investing in high price to rent metros with modest appreciation.
How does the renter investment account work?
The model reinvests the down payment in the market for renters and adds the monthly cost difference (mortgage + tax + maint minus rent) to the investment. Positive difference means renting is cheaper, boosting renter net worth. If owning costs less than renting each month, the renter account does not receive extra contributions. This captures the classic rent and invest the difference strategy.
Which assumptions matter most?
Home appreciation rate, rent growth, investment return, and mortgage rate are the critical assumptions. Small changes in these inputs can flip the winner. Test a base case plus optimistic and pessimistic scenarios. A 1% change in appreciation over 30 years can shift net worth by hundreds of thousands on a typical home price. Local rent to price ratios strongly influence outcomes. Markets where monthly rent exceeds mortgage payment favor renting and investing the surplus aggressively. Home maintenance at two percent of value suits older stock: new construction may justify one percent maintenance input. Primary residence emotional value is not in model: add subjective premium to buy side if home stability matters. Home maintenance at two percent of value suits older stock: new construction may justify one percent maintenance input. Primary residence emotional value is not in model: add subjective premium to buy side if home stability matters.
How do I use this Rent vs Buy calculator on a phone or tablet?
Yes. Rent vs Buy Calculator runs entirely in your mobile browser with the same formulas as desktop. Optional localStorage may remember inputs on your device when enabled in browser settings.
Where is my data stored when I use Rent vs Buy Calculator?
Nowhere on our servers. Calculations execute locally in your browser. Optional localStorage saves form fields on your device only and never transmits portfolio numbers over the network.
Should I rely on Rent vs Buy Calculator for tax or legal decisions?
No. Rent vs Buy Calculator provides educational math only. Tax law, account rules, and personal circumstances vary. Consult a qualified tax or legal professional before transactions with material consequences.
Related Tools
Mortgage Refinance Break Even helps if you already own and wonder about rate changes. Cap Rate Evaluator supports rental property analysis if you are comparing buy to rent versus buy to live. Cash on Cash Return shows rental investor returns when buying as an investment. Monte Carlo FIRE adds stochastic return paths to stress test renter versus buyer outcomes. BRRRR Analyzer and Cap Rate Evaluator extend housing analysis when buy decision is investment not primary residence. BRRRR Analyzer and Cap Rate Evaluator extend housing analysis when buy decision is investment not primary residence.