Rent vs Buy Calculator
Example: Home price: 400000 $ · Down payment: 20 % · Mortgage rate: 6.5 % · Years you plan to stay: 7 years · Current monthly rent: 2200 $ · Annual rent increase: 3 % · Home appreciation rate: 3.5 % · Property tax rate: 1.1 % · Home insurance (annual): 1600 $ · Annual maintenance (% of value): 1 %
| Buying advantage over renting | $71,434 |
| Net cost of buying | $130,855 |
| Total cost of renting | $202,289 |
Worked example
On a $400,000 home held 7 years with 20% down at 6.5%, you spend the $80,000 down plus mortgage, taxes, insurance, and about 1% a year in upkeep. At 3.5% appreciation the home grows to roughly $509,000, and after paying down the loan and subtracting 6% selling costs your net equity is large enough that the net cost of owning comes out well below renting at $2,200 a month rising 3% a year. In this scenario buying is ahead by tens of thousands — but shorten the stay to 2 or 3 years and selling costs can flip the answer to renting.
Frequently asked questions
When does renting beat buying?
Short stays are the classic case. Because buying and selling a home carries large one-time costs — often 6% or more to sell alone — a stay of only a couple of years rarely gives appreciation and equity time to overcome them, so renting wins.
Why include selling costs?
You only capture a home's appreciation when you sell, and selling typically costs about 6% of the price in agent commissions and closing fees. Ignoring that overstates the benefit of owning, so this calculator subtracts it from your equity.
What appreciation rate should I use?
Long-run U.S. home price growth has historically been in the low single digits above inflation, but it varies widely by market. Use a conservative 3 to 4% unless you have strong local data, and try a lower number to stress-test the decision.
Does this account for the tax benefits of owning?
This model focuses on cash costs and equity. Mortgage-interest and property-tax deductions can help owners who itemize, which would tilt the result further toward buying, but many households take the standard deduction and see no benefit.