Rent or Buy Calculator
Whether buying or renting leaves you better off, and after how many years.
Good to know. Rent isn’t money thrown away, and a mortgage isn’t pure saving. The years you stay decide it.
Not financial advice. Uses only the numbers and rates you enter — no live data.
How it works
In plain words
Both paths start with the same money. The buyer spends it on the down payment and buying costs; the renter invests it. Each month, whoever has the lower cost (mortgage and upkeep, or rent) invests the difference. When you leave, the buyer sells, pays selling costs and the rest of the loan. The one with more left comes out ahead.
The formula
Buyer = home value × (1 − selling costs) − loan balance + buyer’s investments Renter = (down payment + buying costs) grown at the return + renter’s investments
Worked example
A 400,000 home with 20% down at 6.5%, against 2,200 a month of rent. With 3% a year of home price and rent growth, a 5% return on savings, 2.5% a year of owning costs and 3% and 6% to buy and sell, after 7 years renting comes out ahead by 11,061.22. Buying pulls ahead after 9 years.
Sources
- Brealey, Myers and Allen, Principles of Corporate Finance, chapter 2 The standard formulas for loan payments, compounding and present value, the same as a spreadsheet’s PMT and FV.
Sources checked September 29, 2026. 6 automated tests check its answers on every change.
About the rent or buy calculator
Renting versus buying is not about whether rent is “wasted”. Both paths have costs that don’t come back. A buyer pays interest, property tax, insurance, upkeep and fees to buy and sell. A renter pays rent. What differs is what each one ends up owning, and that depends mostly on how long you stay.
This calculator gives both paths the same money. The buyer puts the down payment and buying costs into the home; the renter invests that money instead. Every month, whoever pays less invests the difference. When you move, the buyer sells the home, pays the selling costs and the rest of the mortgage. The one with more left comes out ahead.
Time is the big lever. Buying and selling cost several percent of the price, so a short stay rarely pays for them. The longer you stay, the more of the mortgage you pay off and the more any price growth adds up. The break-even line tells you how many years that takes with your numbers.
The other levers are the gap between rent and the cost of owning, how fast prices and rents rise, and what your savings would earn elsewhere. None of these is certain. Try a pessimistic and an optimistic case, and see whether the answer changes.
Questions people ask
Is it better to rent or buy?
It depends mostly on how long you will stay. Buying costs several percent to get in and out, so it usually pays only if you stay long enough. The break-even line shows how long, with your numbers.
Is rent money thrown away?
No more than mortgage interest, property tax and upkeep are. Rent buys a home to live in and flexibility; the comparison has to count the costs of owning too.
Why does the return on savings matter?
Money in a down payment can’t be invested elsewhere. If investments grow faster than home prices, renting and investing the difference can come out ahead.
Does this include tax breaks on mortgage interest?
No. They vary by country and income, and in the US most people now take the standard deduction instead.