Rent vs Buy Calculators
Rent vs Buy Calculator
Enter your rent, a comparable home's price, and how long you'd stay, and the calculator totals both paths — renting at $2,200 a month versus buying a $400,000 home comes out $46,398 in favor of buying over a 7-year stay under the default assumptions.
Rent vs buy over your horizon
Cheaper over 7 years
Buying
by $46,398 under these assumptions
Breakdown
Assumes 3% buyer closing costs, 7% selling costs, constant rates, and no itemized tax deduction. A scenario comparison, not housing-market advice.
About this calculator
A free rent-vs-buy calculator that compares the full cost of each path over the years you'd actually stay, not over a 30-year fantasy. Renting counts rent with annual increases. Buying counts the down payment, closing costs, mortgage payments, property tax, insurance, and maintenance — then credits back the equity you'd recover selling at the end (appreciated price minus 7% selling costs minus the remaining loan). Over 7 years the default $400,000 scenario favors buying by $46,398; over 5 years the margin narrows to $15,023.59. The model holds rates and growth constant and skips the itemized mortgage interest deduction — a scenario comparison for your assumptions, not housing advice or a forecast.
Owning costs more per month — and can still win
The monthly comparison is lopsided on purpose: the example home costs $2,872.62 a month to carry in year one (P&I $2,022.62, plus tax, insurance, and maintenance) against $2,200 rent. Buying wins anyway in the 7-year run because two forces work for the owner in the background — the home appreciates 3.5% a year while rent climbs 3% — and a chunk of every mortgage payment is principal you get back at sale.
That's the structure of the whole question: renting is cheaper now, owning pays back later. The calculator's job is to find where "later" starts under your numbers, which is why the horizon input matters more than any other.
Why the horizon dominates the answer
Buying front-loads enormous one-off costs — a $80,000 down payment carries no return by itself, plus $12,000 of buyer closing costs going in and 7% of the sale price coming out. Short stays can't amortize those costs: the same scenario that wins by $46,398 over 7 years wins by only $15,023.59 over 5, and pushing the stay shorter still tips it to renting. Selling costs alone consume roughly two years of typical appreciation.
Run your own number honestly: the median owner stays far longer than they predicted, but job mobility, family changes, and neighborhood fit cut the other way. If your realistic horizon is under five years, the calculator will usually tell you to keep renting — and it's right.
The assumptions that swing the result
Appreciation is the most powerful input: at 3.5% a year the example favors buying; set it to 0% and the equity credit shrinks by more than $100,000 over 7 years. Rent growth is its mirror — fast-rising rents punish waiting, flat rents reward it. Neither is knowable in advance, which is why the right use of the tool is bracketing: run pessimistic and optimistic cases and see whether the verdict survives both.
The carrying inputs (1.1% property tax, 1% maintenance, $150 a month insurance) scale with the home's value in the model and vary widely by state and house age in reality. They're set to national-typical defaults; replace them with your county's actual rates for a result worth acting on.
What the model leaves out, on purpose
No itemized mortgage-interest deduction (most filers take the standard deduction), no investment return on the down payment a renter keeps invested, no PMI for sub-20% down payments, and constant rates throughout. The renter's opportunity cost is the biggest omission — if you'd genuinely invest the down payment, mentally credit the rent side with those returns before calling a close verdict.
By variant
Questions
- Is it cheaper to rent or buy?
- It depends almost entirely on how long you stay and what prices do. The calculator's default $400,000-home scenario favors buying by $46,398 over 7 years but only $15,023.59 over 5 — and short stays flip it to renting.
- How does the calculator count the equity from buying?
- It simulates selling at the end of your horizon: the appreciated home price, minus 7% selling costs, minus the remaining mortgage balance. That recovered equity offsets the owner's costs before comparing against total rent.
- Why do short stays favor renting?
- Because buying's one-off costs — buyer closing costs going in, ~7% of the sale price coming out — can't be earned back quickly. They consume the first several years of appreciation and principal paydown.
- Does the calculator include the mortgage interest tax deduction?
- No, and it says so. Since the standard deduction roughly doubled, most homeowners no longer itemize, so the deduction is worth $0 to them. If you would itemize, the true buy case is somewhat better than shown.
- Is this housing-market advice?
- No. It's a cost comparison under assumptions you control — appreciation and rent growth are guesses about the future no calculator can make for you.
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