Rent vs buy calculator
Buying ties up a down payment that could have been invested. Here is what each choice really costs over time, the year buying pulls ahead, and how fast the home has to grow for buying to be worth it.
To beat renting, this home has to gain at least
1.98% a year
At 4% a year, buying comes out $184,725 ahead after 10 years. Buying is cheaper from the first year.
- Net cost of renting
- $220,092
- Net cost of buying
- $35,367
- Break-even year
- Year 1
Your numbers
What each choice has cost you, year by year
Each point is the net cost if you stopped that year: everything paid out, less what selling the home would return after the mortgage, less what your investments earned. Lower is better.
Where the money goes over 10 years
| Item | Amount |
|---|---|
| Rent paid | $343,916 |
| Growth on the down payment, invested insteadThe opportunity cost of putting it into a home. | -$88,045 |
| Growth on what renting saved each year | -$35,779 |
| Net cost of renting | $220,092 |
| Item | Amount |
|---|---|
| Down payment | $140,000 |
| Mortgage repayments | $402,898 |
| of which interest | $311,538 |
| Maintenance and ownership costs | $60,000 |
| Selling the home, after repaying the mortgageSold for $1,036,171, with $468,640 still owed. | -$567,531 |
| Net cost of buying | $35,367 |
Both households spend the same each year. Whichever choice is cheaper that year invests the difference, which is why each side earns growth. Stamp duty, agent and legal fees, tax and insurance are not included.
How this calculator works
How does this rent vs buy calculator work?
It follows two households with the same budget for the same number of years. One buys the home with a mortgage; the other rents and invests the down payment instead. Each year, whichever choice costs less invests the difference, so both have spent exactly the same by the end.
At the end of the period the buyer sells the home at its grown value and repays what is left of the mortgage. The net cost of each choice is what it paid out, less what it has to show for it: the sale proceeds for the buyer, investment growth for both.
What does the break-even growth rate mean?
It is how fast the home has to rise in value each year for buying and renting to finish level. If you expect prices to grow faster than that, buying comes out ahead over your chosen period; slower, and renting does.
It is the most useful figure on the page, because the growth rate is the one input nobody knows. Instead of guessing it and trusting the result, you can ask whether this particular home is likely to beat a specific number.
What is the break-even year?
The first year from which buying is cheaper than renting and stays cheaper until the end of the period. If buying only edges ahead briefly and then falls behind again, that is not counted as breaking even.
Why does buying often break even so quickly here?
Because the costs of getting in and out of a home are not included: no stamp duty or transfer tax, no agent or legal fees. In practice these can add up to several per cent of the price each way, and they are the main reason buying usually takes years to overtake renting.
If you want a rough allowance for them, add them to the down payment you could otherwise have invested, or treat the break-even growth rate here as the optimistic end of the range.
What is the opportunity cost of a down payment?
It is what the down payment would have earned if you had invested it instead of putting it into a home. It is shown in the breakdown as growth on the renter’s side, compounded each year at the investment return you enter.
Does it include tax, insurance or closing costs?
No. There is no income or capital gains tax, no tax relief on interest, no insurance, and no stamp duty, agent or legal fees. The rules differ by country and often by state, so leaving them out keeps the comparison the same wherever you are, at the cost of precision for any one place.
Are the figures adjusted for inflation?
No. Every amount is nominal, and maintenance and ownership costs stay at the same amount every year rather than rising. Rent and the home’s value change only at the rates you enter.
Does the mortgage rate change over time?
No. The rate is fixed for the whole period and repayments are calculated with standard amortisation. Real rates move, so it is worth trying a rate a point or two higher to see how sensitive the result is.