Rent vs Buy Calculator
Compare the estimated long-term cost of renting versus buying a home based on home price, rent, deposit, mortgage rate and time horizon.
Overview
This rent vs buy calculator helps you compare the estimated cost of renting with the estimated net cost of buying a home over a chosen period. Enter the home price, deposit, mortgage rate, monthly rent, ownership costs and expected years in the property to see how the two options compare.
How it works
The calculator estimates your mortgage payment using a standard amortization formula, then totals your mortgage payments and yearly ownership costs over the time horizon. It also estimates the home's future value using your growth rate and subtracts the remaining mortgage balance to estimate equity. The net cost of buying is calculated as your deposit, mortgage payments and ownership costs minus the equity built. That figure is then compared with the total rent paid over the same period.
How to use this calculator
- 1Enter the home price and your planned deposit.
- 2Add the mortgage interest rate and loan term.
- 3Enter the monthly rent for a similar property.
- 4Include your estimated annual ownership costs such as tax, insurance and maintenance.
- 5Choose how many years you expect to stay.
- 6Review the estimated rent cost, net buying cost and equity built.
Example Calculation
Home price
$350,000
Deposit
$70,000
Mortgage interest rate
6%
Mortgage term
30
Monthly rent
$1,800
Annual home ownership costs
$6,000
Annual home value growth
3%
Time horizon
7
Estimated net cost of buying
$73,549
In this example, total rent over 7 years is about 151200. Buying has a monthly mortgage payment of about 1679, estimated equity of about 161000 and a net buying cost of about 92000, so buying appears less costly over the period.
Frequently asked questions
What does this rent vs buy calculator estimate?
It estimates the total cost of renting over a chosen period and compares it with the estimated net cost of buying after allowing for mortgage payments, ownership costs and equity built.
Does the calculator include home price growth?
Yes. You can enter an assumed annual home value growth rate, which is used to estimate future home value and equity.
What is included in annual home ownership costs?
This usually includes property tax, home insurance, maintenance and similar recurring owner expenses. You can enter a combined yearly estimate.
Does the mortgage payment include taxes and insurance?
No. The mortgage payment shown is principal and interest only. Ongoing owner costs are entered separately as annual home ownership costs.
Why can buying look cheaper even with a higher monthly payment?
Buying can build equity over time as you pay down the loan and, if values rise, as the home appreciates. That equity can reduce the net cost of buying in the comparison.
Does this calculator include closing costs or selling fees?
No. It focuses on core rent, mortgage, ownership cost and equity assumptions. If you want to account for extra costs, add them into your ownership cost estimate or review them separately.
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Assumptions and warnings
Assumptions
- Results are estimates based on the values you enter.
- Mortgage payments are calculated as principal and interest only.
- Annual home ownership costs are treated as a constant yearly amount.
- Home value growth is assumed to be steady over the selected period.
- Buying and renting transaction costs, moving costs and tax effects are not included unless you add them into your inputs manually.
Warnings
- This calculator provides an estimate only and is not financial advice.
- Housing costs, mortgage rates, home values and ownership expenses can change over time.
- Consider speaking to a qualified professional before making major housing or borrowing decisions.