What This Calculator Compares
Choose a comparison horizon and enter the assumptions for renting and buying. The calculator uses the same initial cash in both scenarios: down payment plus closing costs. It reports estimated net positions, yearly cash outflows, home equity, a break-even horizon, and sensitivity warnings using only the values you enter.
How to Use the Rent vs Buy Calculator
- Enter Comparison horizon (years) and, if needed, Alternative investment return (%/yr, optional).
- Complete the Buy scenario: Home price ($), Down payment (% of price), Mortgage rate (APR %), Loan term (years), Property tax rate (%/yr of value, optional), Homeowners insurance ($/yr, optional), HOA fee ($/mo, optional), Maintenance (%/yr of value, optional), Closing costs (% of price, optional), Home appreciation (%/yr, optional), and Selling costs (% of sale price, optional).
- Complete the Rent scenario: Monthly rent ($), Rent growth rate (%/yr, optional), and Renters insurance ($/yr, optional).
- Leave optional fields blank when appropriate. Defaults include 6% for alternative investment return, 1% for maintenance, 2% for closing costs, 3% for appreciation, 6% for selling costs, and 3% for rent growth.
- Select Calculate. Review the result table and Sensitivity warnings, then use Copy result or Download result (.txt).
How the Comparison Is Calculated
Mortgage payments are calculated and amortized monthly. The comparison then totals each scenario's cash outflow for the year:
Buy cash out = mortgage payments + property tax + homeowners insurance + HOA fee + maintenanceRent cash out = annualized monthly rent + renters insurance
The scenario with the lower annual cash outflow receives the difference in its side investment at the Alternative investment return (%/yr, optional). Home value grows using Home appreciation (%/yr, optional); equity is home value minus the remaining loan balance. Selling costs are deducted from projected home value when calculating buy net position. Break-even is the first year in which buy net position reaches or exceeds rent net position.
Reading the Result and Warnings
The result shows the estimated net position for Buy and Rent after the selected horizon, the net advantage, and the Break-even horizon. The year-by-year table includes Home value, Loan balance, Equity, Buy cash out, Rent cash out, Buy net position, and Rent net position. Buy cash out and Rent cash out are yearly totals, even though mortgage amortization uses monthly payments.
Sensitivity warnings can flag low down payment with PMI excluded, aggressive appreciation or investment-return assumptions, high rent growth, short horizons, high transaction costs, low maintenance assumptions, zero ownership costs, or no break-even within the horizon.
Assumptions and Limitations
- Property tax and maintenance use the home's value at the start of each year.
- Homeowners insurance and HOA fee use the flat amounts entered. Investment growth compounds annually, with yearly cash-flow differences added at year-end.
- PMI, mortgage-interest tax deductions, and capital-gains tax on a home sale are not modeled.
- The calculator does not fetch live home prices, rents, rates, appreciation, rent growth, or investment returns. It is a mathematical projection, not personalized financial, tax, or investment advice.
Calculator Input Handling
The calculator script performs its calculations locally using the values entered in the calculator. The calculator does not send those calculator inputs to a server.
Frequently Asked Questions
How does this calculator compare renting and buying?
Both scenarios start with the same amount of cash - the down payment plus closing costs. The buy scenario puts that cash into the home and tracks equity (home value minus remaining loan balance, net of estimated selling costs). The rent scenario invests that same cash in an alternative investment at the return rate you enter. Each year, whichever scenario has the lower cash outflow has the difference invested too, so both sides are compared on equal footing.
What is the break-even horizon?
It's the first year in which the estimated buy net position reaches or exceeds the estimated rent net position, under your assumptions. Buying usually starts behind because of closing costs, so a longer horizon typically favors buying, while a short one favors renting - but this depends heavily on your inputs.
Does this tool use live home prices, rents, or interest rates?
No. Every figure - home price, rent, mortgage rate, appreciation, rent growth, and the alternative investment return - is a number you type in. The calculator does not look up or fetch any live market data.
Is the result financial advice?
No. This is a mathematical projection based on the assumptions you provide. It does not account for your full financial picture, tax situation, or personal goals, and should not be treated as personalized financial, tax, or investment advice. Consider speaking with a qualified professional before making a decision.
Why does the buy scenario show a side investment?
In years where owning costs less per year than renting (for example, after a fixed mortgage payment stays flat while rent keeps rising), the calculator assumes the buyer invests that surplus at the same alternative return rate used for the rent scenario, so the comparison stays consistent in both directions.