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Rent vs buy calculator
See whether buying a home or renting and investing the difference would leave you with more money by the time you move.
Example Buyer’s equity after selling $219,542
StockEducation Editorial Team · Updated · 16 min read · How we check our tools
The calculator
Compare renting and buying
Output Calculated from your inputs
Your housing assumptions
Compare estimated net wealth after selling the home with the renter’s invested down payment and monthly cost differences.
Run the comparison
Input-based scenario, not live housing data or a recommendation. Growth rates use annual rate ÷ 12. Mortgage payments stop at payoff; property costs continue. Renter wealth starts with the down payment and buying costs, then adds owner cost minus rent monthly; the modeled balance can be negative. Income-tax effects, HOA, PMI and moving/renovation costs are excluded. Full method.
| Year | Home value | Mortgage | Buyer equity | Renter portfolio |
|---|
Educational estimate only. Excludes income-tax effects, HOA, PMI, renovations, moving costs, utilities and differences in property quality.
How to use it (three steps)
Enter the home price, your down payment, the mortgage rate, how long you plan to stay and your current rent. The other inputs have typical defaults you can change. Press Compare renting and buying. Not sure where to start? Load an example.
- 1Enter the home price, down payment, rate, how long you will stay and your rent
- 2Press Calculate and read which option costs less over your stay
- 3Shorten the stay to three years and watch the answer change
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Is it better to rent or buy a house?
It depends on the price compared with rent, how long you stay, and what home values and investments do. In the default example, a $500,000 home with 20% down at 6.25% costs about $3,484 a month to own at first, against $2,500 in rent. After 7 years, a renter who invests the down payment and the monthly difference at 7% has $50,039 more. Raise the rent to $3,000 and buying comes out ahead by $9,457.
Checked against IRS · CFPB · see sources
- Compare wealth. Buyer’s equity after selling against the renter’s investments.
- Owner costs. Interest, tax, upkeep, insurance and transaction costs are not recovered.
- Price to rent. Price ÷ a year’s rent. Higher favors renting.
- Time. Short stays favor renting; buying and selling costs need time to recover.
- Big swings. Rent, home price growth and investment returns can flip the answer.
- Discipline. Renting only wins if the difference is invested.
How the comparison worksWhat changes the answerWhat it leaves outTest yourself
Part 1 of 3 · How it works
How does a rent vs buy comparison work?
A fair comparison asks what each person ends up with, not just who pays more each month. The buyer builds equity. The renter, if disciplined, invests what the buyer spent.
What does the calculator compare?
- The buyer pays the down payment and buying costs, then the mortgage, property tax, maintenance and insurance each month.
- The renter invests the down payment and buying costs on day one, then invests each month whatever owning costs above the rent.
- Rent and home values grow at the rates you set; the renter’s money grows at the investment return.
- At the move date, the buyer sells the home and pays off the mortgage and selling costs. The calculator compares that equity with the renter’s investments.
The mortgage payment is $2,463 a month. Add property tax, maintenance and insurance and owning costs $3,484 in the first month, $984 more than the $2,500 rent. The renter invests that $984, plus the $100,000 down payment and $10,000 of buying costs.
Why can renting come out ahead?
Owning has costs you never get back: interest, property tax, maintenance, insurance, and the cost of buying and selling. The model counts rent for the renter; real renters may also pay insurance, moving costs and charges under their lease. If those owner costs are well above rent, and the renter invests the difference, the renter can build more wealth, especially over a short stay.
Why does the renter’s down payment matter so much?
Because the buyer’s down payment is not free money sitting in the house. It could have been invested somewhere else, and that missed growth is a real cost of owning. Economists call it opportunity cost.
In the default example the buyer hands over $100,000 as a down payment plus $10,000 in buying costs. The renter keeps that $110,000 invested instead. At a nominal 7% a year compounded monthly for 7 years, $110,000 grows to about $179,299 before the renter adds a single monthly dollar. The buyer’s equity has to beat that number just to break even on the starting cash.
This is why the result swings so much on the investment return you enter. It is also why the comparison only holds if the renter really does invest the money. Spend the down payment on a car and a new kitchen, and the renter’s side of the chart disappears.
Compare what each person ends up with, not just the monthly payment.
Part 2 of 3 · What changes the answer
What changes the rent vs buy answer?
Three inputs swing the result most: rent compared with the home price, how fast home values rise, and how long you stay.
How much does rent matter?
Result after 7 years at three rents, $500,000 home
Do home prices, rates and time matter?
| Change | Result after the stay | Break even |
|---|---|---|
| Home values up 5% a year instead of 3% | Buying ahead by $28,170 | 4.3 years |
| Mortgage rate 5% instead of 6.25% | Renting ahead by $7,602 | Not within 7 years |
| Renter earns 5% instead of 7% | Renting ahead by $19,916 | Not within 7 years |
| Stay 3 years | Renting ahead by $43,256 | Not within 3 years |
| $350,000 home, 10% down, $2,000 rent, 10 years | Buying ahead by $12,760 | 7.7 years |
All figures from this calculator on October 15, 2026. Illustrations, not forecasts or recommendations.
In the default the renter stays ahead even after 30 years, under the model’s changing monthly owner-cost and rent gap. The initial $984 gap is not fixed for the whole period. Change any of the big inputs and the answer can flip.
Why does a short stay favor renting?
Buying and selling a home costs a lot of money that you pay whether you stay one year or twenty. Your lender lists the upfront closing costs on the Loan Estimate, and the final figures arrive on the Closing Disclosure three business days before you close.56
Run the default numbers. Buying costs at 2% of $500,000 are $10,000. Using the calculator’s nominal 3% yearly rate divided into monthly growth, it is worth about $616,677 after 7 years, and selling costs of 6% on that come to about $37,001. That is roughly $47,001 in round trip costs. Spread over 7 years it is about $6,714 a year. Spread over 3 years, the buying cost is the same and the selling cost is only a little smaller, so the yearly burden is more than double.
Price growth and paying down the loan are what earn those costs back, and both need time. That is why the break even year in the table matters as much as the final number.
High price to rent and a short stay favor renting. Fast rising prices and a long stay favor buying.
Part 3 of 3 · Beyond the numbers
What does this rent vs buy calculator leave out?
The calculator handles the main money flows. A few real costs and benefits are not in it.
What costs and benefits are missing?
- Mortgage insurance. With less than 20% down, most conventional loans require private mortgage insurance, an extra monthly cost.1
- Taxes. Mortgage interest deductions and the home sale exclusion, up to $250,000 of gain for single filers and $500,000 for many married couples, can favor owners.2
- HOA fees, renovations and moving costs. These all add to owning.
- Discipline. The renter only comes out ahead if they actually invest the difference every month.
What about the things money cannot measure?
Owning gives you control, stability and the freedom to renovate. Renting can offer more flexibility and usually leaves major property repairs to the landlord, subject to the lease and local rules. The calculator illustrates selected money flows under your assumptions; the rest depends on your circumstances.
Test the renter’s investment return. The compound interest calculator shows what a monthly amount, like the $984 gap in the default, could grow to over the years you plan to stay.
Open the compound interest calculator Free, no signup.Would the mortgage interest deduction change my result?
Only if you itemize. Mortgage interest and property tax count as itemized deductions, and you get them only if you skip the standard deduction.3 For qualifying home-acquisition debt incurred after December 15, 2017, the general interest-deduction limit is $750,000 of debt, or $375,000 if married filing separately. Older debt and other rules can differ.4
In the default example, a $400,000 loan at 6.25% charges about $24,867 of interest in the first year, and property tax at 1.1% adds $5,500. Only eligible amounts count, after applicable mortgage-debt and state-and-local-tax limits. Compare those allowable deductions with your standard deduction; any incremental benefit depends on your tax position. If they come to less, the deduction is worth nothing to you.
For an unchanged amortizing fixed-rate loan, annual interest generally falls; the actual tax benefit also depends on tax rules and your other deductions. Treat any tax saving as a modest bonus for the buyer, not as the reason to buy.
Test the assumptions as well as the numbers, then consider your plans and lifestyle.
Mistakes to avoid
Three mistakes to avoid, and what to do instead
Ignoring how long you will stay
Closing costs and selling costs take years to recover. Short stays usually favor renting.
Forgetting what the down payment could earn
Money in a house is not invested elsewhere. The calculator counts that; many buyers do not.
Underestimating ownership costs
Maintenance, insurance, property tax and HOA fees add up to a meaningful share of the home’s value every year.
Quick check
Three quick questions and one why
1. A home costs $450,000 and similar homes rent for $2,500 a month. What is the price to rent ratio?
2. In the default example, which change makes buying come out ahead?
3. Why does a short stay usually favor renting?
Why: why does the renter stay ahead for so long in the default example?
Owning costs $984 a month more than renting at the start, and the renter invests that every month at 7% on top of the invested down payment. The home grows only 3% a year. Unless rent rises faster, home values grow faster or the investments earn less, the invested gap keeps the renter ahead.
Common questions
Rent vs Buy Calculator FAQ
Is it better to rent or buy a house?
Neither wins everywhere. The answer turns on three things: how the price compares with rent, how long you stay, and whether the renter invests the money buying would have tied up. In the default example, a $500,000 home against $2,500 of rent leaves the renter $50,039 ahead after 7 years. Raise the rent to $3,000 and buying comes out $9,457 ahead. Run your own price, rent and stay length, then test a lower home price growth rate to see how sensitive your answer is.
How long do you need to live in a house to make buying worth it?
Often five years or more, though the real number comes from your own inputs. Buying and selling costs are paid up front and at the end, so a short stay has little time for price growth and loan paydown to earn them back. In the default example, round trip costs come to about $47,001, and buying never catches up within 7 years. With home values rising 5% a year instead of 3%, the break even point arrives at about 4.3 years. The calculator shows the break even year for any inputs you enter.
What is a good price to rent ratio for buying?
There is no official cutoff, but a lower ratio means buying is cheaper compared with renting. Work it out by dividing the home price by a full year of rent. A $500,000 home that rents for $2,500 a month has a ratio of about 16.7, since a year of rent is $30,000. The ratio ignores mortgage rates, property tax, maintenance and how long you stay, which is why the full comparison here can disagree with it. Use the ratio as a first look and the calculator for the decision.
Is renting really throwing money away?
No. That saying ignores the money owners also never get back. Mortgage interest, property tax, insurance, maintenance and the cost of buying and selling are spent just like rent is. In the default example, owning costs about $3,484 a month at first against $2,500 for rent, and much of the owner’s payment is interest. Rent pays for a place to live; the lease determines repair responsibilities and moving restrictions. Investing the difference is an assumption here, and buying can still win under other price, rent and growth inputs.
Does the calculator include PMI?
No. Private mortgage insurance is usually required on a conventional loan when you put down less than 20%, and it adds a monthly cost until you build enough equity. The calculator leaves it out, so with a small down payment buying will look somewhat better than it really is. For a rough sensitivity check, extra insurance can approximate PMI, but this applies a percentage of home value throughout the stay and does not model PMI cancellation. Your lender’s Loan Estimate shows the actual monthly PMI charge before you commit to a loan.
Does it include the mortgage interest deduction?
No. The deduction helps only people who itemize, and many homeowners take the standard deduction instead because it is larger. If your mortgage interest, property tax and other itemized items together beat the standard deduction, owning will look a little better than the calculator shows. Qualifying home-acquisition debt incurred after December 15, 2017 generally has a $750,000 limit, or $375,000 if married filing separately; older debt can have different rules. Interest generally falls on an unchanged amortizing loan, but tax benefits also depend on limits and your other deductions.
What investment return should the renter use?
Use what the renter would realistically earn after fees on money left invested for the whole stay. The default is 7% a year, a common long term teaching assumption for a stock heavy portfolio, not a forecast. Try 5% to see how much the result depends on it: in the default example, renting still leads, but by $19,916 instead of $50,039. If the renter would keep the money in savings rather than stocks, enter what that account actually pays.
Can I save or share my comparison?
Yes. Save my numbers keeps your inputs in this browser on this device, so they are there when you come back. Copy link to these numbers creates a web link that opens the calculator with the same inputs filled in, and nothing else is stored or sent with it. That makes it easy to send a scenario to a partner or a lender. The calculator does not fetch live mortgage rates or home prices; every result comes from the numbers you type in.
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Rent vs buy on one card, and where to go next
- Step 1 · DoneHow the comparison works
See it on one card
- Compare wealth. Buyer’s equity after selling against the renter’s investments.
- Owner costs. Interest, tax, upkeep, insurance and transaction costs are not recovered.
- Price to rent. Price ÷ a year’s rent. Higher favors renting.
- Time. Short stays favor renting; buying and selling costs need time to recover.
- Big swings. Rent, home price growth and investment returns can flip the answer.
- Discipline. Renting only wins if the difference is invested.
- 2Step 2 · NowGrow the difference
See what investing a monthly amount could grow to.
Open the compound interest calculator Free, no signup. - 3Step 3Follow the learning pathThe learning pathFree
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Lessons, videos, tools and quizzes, ordered so each step builds on the last, from market basics to building a portfolio.
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Sources and assumptions
- Consumer Financial Protection Bureau: What is private mortgage insurance?. PMI is usually required on conventional loans with less than 20% down.
- IRS Topic No. 701, Sale of your home. Up to $250,000 of gain, or $500,000 for many married couples filing jointly, can be excluded from income.
- IRS: Publication 530, Tax Information for Homeowners. Homeowners deduct mortgage interest and property tax only if they itemize instead of taking the standard deduction.
- IRS: Real estate FAQs (taxes, mortgage interest, points, other property expenses). For qualifying home-acquisition debt incurred after December 15, 2017, the general interest-deduction limit is $750,000 of debt, or $375,000 if married filing separately. Older debt and other rules can differ.
- Consumer Financial Protection Bureau: Loan Estimate explainer. Defines closing costs as the upfront costs charged to get a mortgage.
- Consumer Financial Protection Bureau: Closing Disclosure explainer. Lenders must give the Closing Disclosure three business days before closing.
Method: monthly growth rates are the yearly rates ÷ 12. The buyer pays the mortgage until payoff and property tax, maintenance and insurance throughout. The renter starts with the down payment and buying costs invested, then adds the monthly amount by which owning costs more than rent; the balance can go negative if renting costs more. At the move date, buyer wealth is home value minus the mortgage balance and selling costs. The default example is a $500,000 home, 20% down, 6.25% on a 30 year mortgage, a 7 year stay, $2,500 rent, 3% home value and rent growth, 1.1% property tax, 1% maintenance, 0.35% insurance, a 7% renter return, 2% buying and 6% selling costs. Scenario outputs retain the accepted calculator examples; expanded guide arithmetic was reconciled to its monthly assumptions on October 24, 2026. Results exclude income tax effects, HOA fees, PMI, renovations and moving costs. All amounts are in U.S. dollars.
Page history. October 24, 2026: V11 layout and expanded guide integrated; existing monthly calculations, working controls and limitations preserved.
StockEducation provides general education, not personal financial, tax or legal advice. Results are illustrations based on the assumptions you enter, not forecasts or promises of any return. Investing involves risk, including the loss of money you invest.
