Rent versus Buy Calculator

Enter the home price and current rent for homes that meet similar needs in the same area. Add the down payment, mortgage rate and term, property tax, maintenance allowance, annual rent growth, renters insurance, investment return, and projection horizon. Amounts use the displayed currency, with no currency conversion.

The buy path starts with home equity equal to the down payment. The rent path starts with that down payment invested. Each month both liquid accounts receive the investment return and home value changes at its entered rate. The current rent is charged, then updated for the next month. The model compares housing outflows, and the path with lower outflow invests the difference at month end.

At each year end, buy path net worth is modeled home value minus remaining mortgage balance plus buyer investments. Rent path net worth is the renter investment account. The first year shown as a buy lead is only the earliest crossover. Review later rows because the lead can change.

The result omits costs that can materially affect a real housing comparison, including purchase and sale charges, owner insurance, mortgage insurance, association fees, utilities, renovations, and taxes. Add local estimates outside this model before relying on a scenario comparison.

Example inputs: a 400,000 USD home, 20% down, a 6.5% nominal annual mortgage rate over 30 years, 1.2% annual property tax, 1% annual maintenance, 3% effective annual home appreciation, 2,000 USD monthly rent with 3% effective annual rent growth, 20 USD monthly renters insurance, a 7% effective annual investment return, and a 30 year projection.

The modeled monthly principal and interest payment is 2,022.62 USD. At year 10, modeled net worth is 266,282.95 USD for buying and 252,641.48 USD for renting. At year 30, it is 1,090,657.39 USD for buying and 1,013,442.18 USD for renting. Buying first leads at the end of year 1 in this scenario. A later year can reverse that comparison.

Use this scenario comparison when you can estimate the price and recurring costs of a primary home alongside rent for a similar home. It shows how the entered financing, growth, and investment assumptions affect modeled net worth over time.

Use several cases and add local estimates for omitted expenses separately. This model does not determine whether a purchase is affordable, value housing preferences, or predict future prices and returns.

Enter rates as percentage points: 3 means 3%, not 0.03%. Mortgage interest uses the nominal annual rate divided by 12. Home value change, rent growth, and investment return are effective annual rates, so enter the annual rate rather than a monthly rate.

Property tax and maintenance are modeled as annual percentages of home value, charged monthly as the modeled value changes. Renters insurance is a monthly amount. The model does not include homeowners insurance or other omitted owner costs, so do not treat the displayed monthly difference as a complete household budget.

This is a deterministic scenario model, not a forecast. The mortgage rate is treated as a nominal annual rate divided by 12. Home value change, rent growth, and investment return are treated as effective annual rates converted to equivalent monthly rates. Property tax and maintenance are charged monthly as percentages of modeled home value. Renters insurance is a monthly cost. The down payment is invested in the renter path; the lower monthly housing outflow is invested in the corresponding path at month end. The model assumes each path funds its own housing costs from household cash flow and does not borrow to cover a shortfall. It excludes purchase and sale costs, homeowners insurance, mortgage insurance, association dues, utilities, renovations, investment fees, income tax effects, and tax deductions. Local billing methods and actual loan servicing may differ.

Use Home Affordability to check whether the modeled purchase payment fits an income and debt budget. A net worth comparison does not show whether a household can comfortably make each payment.

If you already own a home, Mortgage Refinance Break Even compares payments under the same balance and remaining term. For a property bought to produce rental income, use Cap Rate Evaluator. Those tools model different cash flows.