Rent vs Buy Calculator
Compare the true 5-year cost of renting versus buying a home including equity, appreciation, and all costs.
Better Option (5 years)
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5-Year Rent Cost
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5-Year Buy Net Cost
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What is Rent vs Buy Calculator?
A rent vs buy calculator compares the total financial cost of renting versus purchasing a home over a 5-year period. It accounts for mortgage payments, closing costs, property taxes, maintenance, and the equity you build through mortgage paydown and home appreciation — giving you a clear picture of which option is more cost-effective.
How to use
- 1 Enter the home price, down payment percentage, and mortgage rate.
- 2 Enter your current monthly rent.
- 3 Enter the expected annual home appreciation rate and property tax rate.
- 4 The calculator computes total 5-year costs for both renting and buying.
- 5 The better option is highlighted based on net out-of-pocket cost.
Formula
Example calculation
Home $400,000, 10% down, 7% rate, $2,000/month rent, 3% appreciation, 1.2% tax. 5yr rent cost ≈ $120,000. 5yr buy net cost ≈ $118,000. Buying is slightly better after equity.
Frequently asked questions
What closing costs should I expect?
Closing costs typically run 2–5% of the purchase price and include lender fees, title insurance, appraisal, escrow, and prepaid property taxes/insurance. This calculator uses 3% as a default estimate.
Is appreciation guaranteed?
No. Home appreciation varies greatly by location, market conditions, and timing. The national average has been roughly 3–5% annually over long periods, but individual markets can be flat or decline.
What maintenance costs should I assume?
A common rule of thumb is 1% of the home's value per year for maintenance and repairs — more for older homes. This is often underestimated by first-time buyers.
Does this account for investment returns on the down payment?
No. For a more complete comparison, consider that the down payment and monthly cost difference could be invested. This calculator focuses on direct housing costs.
When does buying clearly win?
Buying generally wins when you stay long enough (7+ years typically), home prices are appreciating, and your mortgage payment is close to or below market rent. Short timelines usually favor renting.