Rent Vs Buy Calculator
Free Rent vs Buy Calculator. Free online tool with accurate results using verified formulas. Includes worked examples, FAQ, and instant calculations.
Reviewed by Sahil, Senior Finance & Tax Editor · Editorial policy
Rent Vs Buy Calculator Formula
Net Cost of Buying = Total Payments + Taxes + Insurance + Maintenance - Equity Built
Compares the total net cost of homeownership (all expenses minus equity gained from appreciation and principal paydown) against total rent paid over the same period. For renters, assumes the down payment amount is invested with a 7% annual return.
Rent Vs Buy Calculator — Worked Examples
Example 1: Moderate Market Comparison
Problem:Home price $350,000, current rent $2,000/month, 20% down, 6.5% mortgage rate, 3% appreciation, 3% rent increases. Compare over 10 years.
Solution:Down payment: $70,000\nLoan: $280,000\nMonthly mortgage: $1,770\nAfter 10 years:\n- Home value: ~$470,000\n- Equity built: ~$270,000\n- Total buy costs: ~$350,000\n- Total rent paid: ~$275,000\n- Renter's invested down payment: ~$138,000
Result:Buying builds ~$270,000 in equity vs renter's ~$138,000 investment value. Break-even around year 4-5.
Rent Vs Buy Calculator — Frequently Asked Questions
Is it better to rent or buy a home?
There's no universal answer — it depends on your financial situation, local market, how long you'll stay, and personal preferences. Buying builds equity and provides stability but comes with maintenance, taxes, and upfront costs. Renting offers flexibility and lower upfront costs but no equity building. Generally, the longer you plan to stay (5+ years), the more buying favors you financially. In expensive markets with high price-to-rent ratios, renting and investing the difference can be financially superior.
How does home appreciation affect the rent vs buy decision?
Home appreciation is a critical factor. At 3% annual appreciation, a $350,000 home becomes worth $470,000 after 10 years — $120,000 in gained value. Higher appreciation rates strongly favor buying. However, appreciation is not guaranteed — some markets experience flat or declining values for extended periods. Historical national average appreciation is about 3-4% per year, but individual markets vary widely. It's wise to run calculations with conservative (2%), moderate (3-4%), and optimistic (5-6%) appreciation rates.