Rent vs. Buy Calculator

Last updated: August 5, 2026  ·  Reviewed by the DoCalc team

What Is a Rent vs. Buy Calculator?

"Renting is throwing money away" is one of the most repeated — and most incomplete — pieces of financial advice. Buying comes with real costs renting doesn't: a down payment that could have been invested elsewhere, closing costs, maintenance, property tax, and selling costs when you eventually move. This calculator runs the full comparison, month by month, so you can see which option actually costs less over the specific number of years you plan to stay.

How the Comparison Works

The calculator simulates both paths over your chosen timeframe. For buying, it tracks your mortgage balance paying down, the home's value appreciating, and your ongoing costs (principal & interest, plus an estimated 2%/year for property tax, insurance, and maintenance combined) — then nets out your final home equity (after selling costs) against everything you spent, including closing costs. For renting, it tracks your rent (growing annually) plus what your down payment and closing costs would have grown to if invested instead of spent on a home purchase — that forgone growth is the "opportunity cost" of buying.

Worked Example

$2,200/mo rent, $450,000 home, 20% down, 6.75% rate, staying 7 years, 3.5% appreciation, 3% rent growth, 6% investment return:

That's remarkably close — and it's not a coincidence. The 5-7 year mark is commonly cited as roughly where buying starts to overtake renting for a typical scenario like this one. Run the same numbers at 10 years and buying pulls ahead by around $36,700; at 15 years, by over $130,000. Time in the home is often the single biggest factor in this decision — more than the interest rate.

What Assumptions Are Built In

Assumption	Value used
Loan type	30-year fixed
Property tax + insurance + maintenance	2% of original home price per year (combined)
Closing costs (buying)	3% of home price
Selling costs (when you eventually sell)	6% of the home's value at that time

Pros and Cons of Each Path

Renting pros: lower upfront cost, flexibility to move, no maintenance responsibility, cash that would've been a down payment stays invested and liquid.

Buying pros: builds equity over time, payment is more predictable (fixed-rate) than rent increases, potential appreciation gain, eventual freedom from a housing payment once paid off.

Who Should Use This Calculator

Use it if you're deciding between renting and buying and want a real numbers-based comparison for your specific situation, not a generic rule of thumb.

Weight it alongside non-financial factors — stability, flexibility to relocate for a job, and lifestyle preferences all matter too, and this calculator only covers the financial side.

Common Mistakes to Avoid

The most common mistake is comparing rent to the mortgage payment alone, ignoring property tax, insurance, maintenance, and the opportunity cost of the down payment — which understates the true cost of owning. A second mistake is assuming buying always wins "because you build equity," without accounting for how much of that equity is offset by selling costs if you move sooner than expected. A third is picking an unrealistically short or long timeframe — be honest about how long you're actually likely to stay.

Expert Recommendation

Run the numbers at your realistic timeframe, then check the result at a year or two shorter and longer — if the answer doesn't flip, you can be more confident in the conclusion regardless of exactly how long you end up staying.

Frequently Asked Questions

Conclusion

Neither renting nor buying is universally "correct" — the answer depends heavily on how long you'll stay, and this calculator's biggest value is showing you exactly where that crossover point sits for your own numbers. Adjust the years-to-stay slider above to find yours.

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