How the Rent vs. Buy Calculator works
Renting trades equity for flexibility, while buying combines shelter with a leveraged asset and significant transaction costs. This calculator compares cumulative rent with estimated ownership cash costs and the equity left after a sale.
Method: Net ownership cost compares mortgage interest, ownership costs, selling costs, and equity with rent and investment opportunity cost.
Inputs to review
- Home price: Use a realistic current value and test a conservative alternative.
- Down payment: Use a realistic current value and test a conservative alternative.
- Mortgage rate: Use a realistic current value and test a conservative alternative.
- Monthly rent: Use a realistic current value and test a conservative alternative.
- Years before moving: Use a realistic current value and test a conservative alternative.
- Annual home appreciation: Use a realistic current value and test a conservative alternative.
- Annual rent increase: Use a realistic current value and test a conservative alternative.
- Annual tax, insurance, and maintenance: Use a realistic current value and test a conservative alternative.
How to interpret the result
The break-even result is most useful as a sensitivity test. Change the number of years, appreciation, maintenance, and rent growth. If a small assumption reverses the answer, flexibility and risk tolerance should carry more weight than the headline number.
Assumptions and limitations
Future prices, repairs, taxes, insurance, investment returns, and selling costs are uncertain. The estimate omits tax deductions and assumes a conventional fixed-rate mortgage.
Recalculate when rates, balances, income, goals, or time horizons change. A useful estimate is a range built from several plausible scenarios, not a single precise-looking number.