The formula
How it works
Compare the real cost of renting against buying over the years you plan to stay. The calculator adds up mortgage payments, ownership costs and the equity you build, and weighs it against the rent you would pay.
FAQ
Why can buying still cost money even as you build equity?
Buying involves interest, property taxes, insurance and maintenance that you never get back, plus the opportunity cost of the down payment. The calculator nets the equity you gain against all the cash you put in, so a shorter stay — before equity and appreciation build up — often favours renting.
What is the break-even point?
It is the number of years of staying put at which buying becomes cheaper than renting. Below it, the upfront costs of buying dominate; above it, growing equity and stable payments win out. Adjust the years you plan to stay to see which side of the line you fall on.
Why does the calculator assume a 30-year mortgage?
It amortizes the loan over the standard 30-year term and then looks at the remaining balance after the years you plan to stay, since most buyers don’t pay off the full loan before moving or selling. You can still test other rates to see how payment size shifts the outcome.
Does it account for the opportunity cost of the down payment?
Not directly — it treats the down payment as cash spent rather than money that could have been invested elsewhere. If renting frees up that cash to invest, the true cost of buying is a bit higher than the calculator shows.
Are selling costs like agent commissions included?
No, the equity figure assumes you keep the home rather than sell it. Selling typically costs 5–8% of the home’s value in commissions and closing costs, which would reduce your equity if you sold at the end of the period.
Why does renting look better for shorter stays?
Buying carries large upfront costs — closing costs, the down payment, and early mortgage payments that are mostly interest — that take years of equity growth to offset. The shorter the stay, the less time those costs have to pay for themselves.
How sensitive is the result to the appreciation rate?
Very — a higher appreciation rate grows your equity faster and can flip the answer toward buying, while a flat or declining market favors renting. Since future appreciation is uncertain, it’s worth testing a range of values rather than relying on one guess.
About the rent vs. buy calculator
This calculator compares the total cost of renting a home with the cost of buying one, over the number of years you expect to stay. Buying is not simply “throwing money away on rent” — it carries interest, taxes, insurance and maintenance, offset by the equity and appreciation you build. The calculator tallies both paths and tells you which leaves you financially better off for your time horizon.
How to use it
Enter the home price, your down payment, the mortgage rate, and the monthly rent for a comparable place. Add how many years you plan to stay, the expected home appreciation, yearly ownership costs as a percentage of the price, and the annual rent increase. The calculator shows the net cost of buying, the total rent paid, and which option is cheaper over that period.
The formula
Buying’s net cost is the cash you put in minus the equity you keep: , where equity is the appreciated home value minus the remaining loan balance. Renting’s cost is the sum of rent over the period, grown each year by the rent increase. The smaller net figure is the cheaper choice.
Where it is used
People at a crossroads — a new job, a growing family, or simply tired of renting — use it to make the rent-or-buy decision with numbers rather than gut feel. It highlights how the length of stay drives the answer, since buying’s heavy upfront costs need years to pay off. It is a reality check against the common belief that buying is always the better deal.