Rent or Buy Calculator — Rent vs Buy a Home
Should you rent or buy? Enter the home price, mortgage terms, monthly rent, expected appreciation and investment returns, and see which option costs less over your time horizon — with a year-by-year cost chart and the break-even year.
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Net saving from renting vs buying over the period
How does this calculator work?
Net buy cost = total mortgage + tax/insurance/maintenance payments minus home equity gained. Net rent cost = cumulative rent minus the investment gain on the down payment. Whichever is lower over your time horizon is the cheaper option. The break-even year is when buying overtakes renting on a cumulative net-cost basis.
Formula
How this is calculated
Buying and renting both involve real ongoing costs, and a direct comparison requires tracking what each option actually costs you net of the wealth it creates. This calculator models the buying side as: down payment (upfront) + mortgage principal and interest payments (using the standard annuity formula) + a combined estimate for property tax, homeowners insurance, and maintenance (set at 2.7% of home value annually, reflecting roughly 1.2% tax, 0.5% insurance, and 1% maintenance — common US-market estimates you can re-evaluate for your region). Against these payments it credits the equity you build, modelled as the current home value (growing at the appreciation rate you enter) minus the remaining loan balance.
On the renting side, the calculator tracks cumulative rent payments (growing each year by the rent increase rate) and subtracts the investment gain the renter earns by putting the equivalent down payment to work in the market at the specified return rate. The difference between the two net costs at your chosen horizon is shown as the advantage of the cheaper option.
The model uses simplified assumptions: it ignores closing costs, transaction costs on both sides, capital gains tax on home sale, rent control, mortgage insurance, and tax deductions. Real break-even points vary significantly by city, price tier, and personal tax situation. Treat the output as an illustrative comparison, not financial advice.
Frequently asked questions
Buying involves large upfront costs (down payment, closing costs) that renting does not. The break-even year is when the cumulative net cost of buying dips below the cumulative net cost of renting. If you plan to move before that year, renting may be cheaper. After it, buying typically wins — assuming appreciation holds.
Mortgage principal and interest (standard PMT formula), plus an estimated 2.7% of home value per year for property tax (~1.2%), homeowners insurance (~0.5%), and maintenance (~1%). These are US-centric averages; edit the appreciation and investment-return assumptions to suit your market.
The renter is assumed to invest the down payment amount in the stock market (or another vehicle) at the annual return rate you enter. That investment grows each year, and its cumulative gain is subtracted from total rent paid to get the renter's net cost.
Also known as
TG we-Calculate Editorial Team. (2026). Rent or Buy Calculator — Rent vs Buy a Home [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/rent-or-buy-calculator
TG we-Calculate Editorial Team. "Rent or Buy Calculator — Rent vs Buy a Home." TG we-Calculate. 2026. https://we-calculate.com/calculator/rent-or-buy-calculator.
TG we-Calculate Editorial Team, "Rent or Buy Calculator — Rent vs Buy a Home," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/rent-or-buy-calculator
@misc{wecalculate_rent_or_buy_calculator, title = {Rent or Buy Calculator — Rent vs Buy a Home}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/rent-or-buy-calculator}}, year = {2026}, note = {TG we-Calculate} }
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