Rent vs Buy Calculator
Compare the long-term financial impact of renting versus purchasing a home.
Rent Scenario
Historical average ~3%
How long you plan to stay
Buy Scenario
Typically 15 or 30 years
Historical average ~3–4%
Renting
Buying
Over 7 years, the flexibility of renting and investing your down payment may outperform homeownership costs at current inputs. A longer time horizon or higher appreciation often favors buying.
*Renting scenario assumes down payment invested at 7% annual return.
Total Cost Comparison Over 7 Years
Renting vs Buying: What to Know
- →Renting provides flexibility — ideal if you may move within a few years. Transaction costs of buying (closing costs, agent fees) typically take 5–7 years to recover through equity.
- →Buying builds equity over time through principal paydown and home appreciation. It also provides housing stability and potential tax benefits.
- →Results depend heavily on local appreciation rates, how long you stay, your interest rate, and what you do with the down payment if you rent instead.
- →This calculator is educational. It does not account for closing costs, maintenance, tax deductions, or opportunity costs in full detail.
Learn More
Understanding This Calculator
What this calculator does
This calculator compares the total cost of renting versus buying a home over a given time horizon, factoring in home price, rent, down payment, mortgage rate, appreciation, and selling costs.
How to use the results
- 1.Enter the home price and comparable monthly rent.
- 2.Set your down payment, mortgage rate, and how long you'll stay.
- 3.The calculator shows whether buying or renting costs less over that period.
Worked example
A $400,000 home vs. $2,000 rent over 7 years: buying wins if appreciation and equity outpace rent and selling costs, but a 5-year horizon often favors renting due to closing costs.
Important assumptions & limitations
- •Assumes a steady appreciation rate; real home values fluctuate by market.
- •Does not include maintenance (typically 1–2% of home value yearly) or the opportunity cost of the down payment.
- •Selling costs (6% commission plus fees) significantly affect short-horizon comparisons.
Frequently asked questions
Learn More About Mortgages and Home Buying
Interested in learning more about mortgages, refinancing, home loans, and the home-buying process? Visit MortgageWizardTools.com for additional beginner-friendly guides and educational resources.
Disclaimer: This calculator is for educational purposes only and does not constitute financial, mortgage, or real estate advice. Results are estimates based on simplified assumptions and do not account for closing costs, maintenance, tax deductions, PMI, or all opportunity costs. Consult a qualified financial or real estate professional for personalized guidance.
Mike Starr
Founder, FinanceWizardTools · M.S. Organizational Management