Rent or buy: compare the true cost
Compare renting with buying over the years you expect to stay. The calculator counts everything you pay to own a home, subtracts the equity you keep when you sell, and compares that with your rent after crediting what your down payment would have earned if you had invested it. Every assumption can be changed.
What is counted
- Buying: down payment, closing costs, mortgage payments, property tax and maintenance, minus your equity when you sell, which is the home's value after price growth, less selling costs and the remaining loan.
- Renting: rent, rising each year, minus what your down payment and closing costs would have earned invested instead.
That last item, the opportunity cost of your cash, is what simple rent-versus-buy comparisons leave out, and it often changes the answer.
A close call
Take a 400,000 dollar home with 80,000 down at 6.5%, compared with 2,000 dollars a month in rent, over seven years, with 3% home price growth, 3% closing costs, 6% selling costs and a 5% return on investments. Renting costs about 184,000 in rent but the invested down payment earns about 37,000, so its true cost is about 146,000. Buying comes to about 148,000. A difference of barely a thousand dollars over seven years means the decision rests on your assumptions, not on a rule.
The assumptions that move the result
- How long you stay. Closing and selling costs are paid once, so buying usually needs several years to catch up. Short stays favour renting.
- Home price growth. One percentage point more or less a year shifts the result by tens of thousands of dollars. Try a pessimistic figure as well as an optimistic one.
- Investment return. If you would not actually invest the down payment, set this to your savings account rate.
- Maintenance. 1% of the home's value a year is a common allowance. Older homes often need more.
Beyond the numbers
Owning gives stability, control over the property and protection from rent rises. Renting gives flexibility, no repair bills and no large sum tied up in one asset. Use the calculator to put a price on the choice, then decide which of those matters more to you.
Estimates only, not financial advice. Tax deductions, insurance and HOA fees are not included and vary by location.