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Calculator results are estimates for planning, not a loan approval, commitment, rate lock, or Loan Estimate.
What the rent vs. buy calculator calculates
This tool compares the total net cost of renting against the total net cost of buying over a time horizon you choose — typically several years — so you can see which option actually costs less, not just which has the lower monthly payment.
On the renting side, it projects your current rent forward using an expected annual increase. On the buying side, it adds up the mortgage payment, but also nets out the equity you build through principal paydown and estimated home-price appreciation, since that equity is money you'd recover when you eventually sell.
The result is framed as an estimated advantage — buying or renting — in dollar terms over your chosen time horizon, along with the supporting numbers behind it.
How to use it, step by step
- 1Enter your current monthly rent and the annual rent increase you expect (a modest, realistic percentage is usually more useful than zero).
- 2Enter the home price you're comparing against, along with your planned down payment and an interest rate to test.
- 3Enter an annual appreciation assumption for the home — a conservative, long-run estimate is generally more useful than a recent hot-market number.
- 4Choose the time horizon you actually expect to stay — rent vs. buy math changes a lot between a 3-year horizon and a 10-year one.
- 5Review the estimated buying vs. renting advantage and the supporting breakdown: total rent paid, total buying out-of-pocket cost, and equity built.
A worked example
Example inputs
- Current monthly rent
- $2,200
- Expected annual rent increase
- 3%
- Home price
- $420,000
- Time horizon
- 7 years
Result
Over 7 years with 3% annual increases, total rent paid climbs from $2,200/month toward roughly $2,700/month by year seven, for meaningful cumulative rent paid over the period.
On the buying side, a portion of each mortgage payment builds equity, and estimated appreciation adds further value on paper. Net of the buying-specific costs (closing costs, maintenance, and the illustrative interest rate used), the calculator nets these against total rent paid to estimate which option comes out ahead over the 7-year horizon in this example.
This is a planning comparison, not investment advice — actual outcomes depend on real market appreciation, maintenance costs, and how long you actually stay.
How to read the result
A longer time horizon generally favors buying, since upfront closing costs get spread over more years and more equity has time to build. A short horizon (2–3 years) often favors renting, since transaction costs eat into any advantage.
The appreciation assumption matters a lot — a modest, conservative number gives a more trustworthy comparison than an optimistic one borrowed from a recent hot market.
This comparison doesn't capture non-financial factors like stability, flexibility to relocate, or the value of not being responsible for maintenance — weigh those alongside the numbers.
Common mistakes
- Using an unrealistically high appreciation rate, which can make buying look better than a more conservative, realistic assumption would.
- Ignoring maintenance and repair costs on the buying side — owning a home includes ongoing costs that renting doesn't, and they belong in an honest comparison.
- Running the comparison over too short a time horizon when you actually expect to stay much longer, or vice versa — the answer is highly sensitive to how long you'll actually be in the home.
- Forgetting that the 'equity built' portion of the buying case isn't cash in hand until you sell or refinance — it's a paper gain until then.
Related guides
- Mortgage Payment Calculator
- Home Affordability Calculator
- Down Payment Calculator
- Glossary: Down Payment
Frequently asked questions
Not always — it depends heavily on how long you stay, local price appreciation, rent growth, and the specific numbers you enter. This calculator is built to test your actual scenario rather than assume one answer applies to everyone.
A conservative, long-run estimate is generally more useful than a recent hot-market number. Home values don't rise in a straight line, and using an aggressive assumption can make buying look better than it may actually turn out to be.
It accounts for the core financial comparison — payment, rent growth, equity, and appreciation. Actual ownership also includes maintenance and repairs, which vary a lot by home age and condition, so factor in a maintenance budget separately.
Buying carries upfront closing costs that get 'paid off' over time as equity builds. Over a short horizon those costs are a bigger drag; over a longer horizon they're spread thinner and appreciation has more time to work, which is why the horizon you choose matters a lot.
It's the combination of the principal you've paid down on the mortgage plus any estimated appreciation in the home's value over the time horizon — in other words, the portion of your buying costs that comes back to you if you sell.