Rent vs Buy Calculator
What buying leaves you with against what renting and investing the difference leaves you with, over a horizon you choose.
Rent against buy is usually argued with the monthly payment, which is the one figure that cannot settle it. The payment is not the cost: a mortgage builds equity, ownership costs money every year, and the deposit is money that would otherwise be invested.
Enter the purchase, the mortgage, the rent and the horizon, and this calculator compares what each path leaves you with at the end of the period rather than what each one costs per month.
At a glance
- What you enter
- Purchase price, Deposit, Mortgage rate, Mortgage term, Rent for a comparable home, Annual ownership costs, House price growth, Rent growth, Return on invested money, Years before comparing
- What you get
- Difference between buying and renting, What buying leaves you, What renting leaves you, Monthly mortgage payment, Price against a year of rent
- Formula shown
- Yes - every step, right below your results.
- Cost and privacy
- Free, no account needed, and nothing you type is stored.
See worked examples ↓ Read the FAQ ↓ Share this calculator ↓
Results are estimates for general information only - always verify with a professional or official source before acting on them.
How to use the Rent vs Buy Calculator
- 1 Enter Purchase price
- 2 Enter Deposit - The money that would otherwise be invested.
- 3 Enter Mortgage rate (percent a year)
- 4 Enter Mortgage term (years)
- 5 Enter Rent for a comparable home
- 6 Enter Annual ownership costs - Property tax, insurance, maintenance, fees. Everything the mortgage does not cover.
- 7 Enter House price growth (percent a year)
- 8 Enter Rent growth (percent a year)
- 9 Enter Return on invested money (percent a year) - What the deposit and the monthly difference would earn if they were invested instead.
- 10 Enter Years before comparing (years) - Buying usually wins later rather than sooner, so try more than one horizon.
- 11 Press Calculate. You get Difference between buying and renting, What buying leaves you, What renting leaves you, Monthly mortgage payment, Price against a year of rent, and every intermediate step stays visible under “How is this calculated?”
- 12 Change one number at a time to see what moves the result - that is usually the most useful thing a calculator can tell you.
Worked examples
Real numbers run through this calculator. Open any example to load it into the form above and change it.
A ten year stay in a market priced at 16 years of rent
A 350,000 purchase with a 70,000 deposit against rent of 1,800 a month.
You enter
- Purchase price
- $350,000.00
- Deposit
- $70,000.00
- Mortgage rate
- 6.50%
- Mortgage term
- 30 years
- Rent for a comparable home
- $1,800.00
- Annual ownership costs
- $9,000.00
- House price growth
- 3.50%
- Rent growth
- 3%
- Return on invested money
- 5%
- Years before comparing
- 10 years
You get
- Difference between buying and renting
- $30,543.08
- What buying leaves you
- $256,336.41
- What renting leaves you
- $225,793.33
- Monthly mortgage payment
- $1,769.79
- Price against a year of rent
- 16.20 years of rent
The mortgage payment is 1,769.79 and owning costs 2,519.79 a month once the annual costs are included. After ten years the house is worth 493,709.57 with 237,373.15 of mortgage left, so buying leaves 256,336.41 of equity against 225,793.33 for renting and investing, a difference of 30,543.08 in favour of buying.
The same question over five years instead of ten
A shorter stay, which is where buying has the least time to recover its costs.
You enter
- Purchase price
- $280,000.00
- Deposit
- $56,000.00
- Mortgage rate
- 6%
- Mortgage term
- 30 years
- Rent for a comparable home
- $1,600.00
- Annual ownership costs
- $7,000.00
- House price growth
- 2.50%
- Rent growth
- 4%
- Return on invested money
- 6%
- Years before comparing
- 5 years
You get
- Difference between buying and renting
- $10,644.10
- What buying leaves you
- $108,352.54
- What renting leaves you
- $97,708.44
- Monthly mortgage payment
- $1,342.99
- Price against a year of rent
- 14.58 years of rent
Five years of a 1,342.99 payment and 7,000 a year of costs leave 108,352.54 of equity against 97,708.44 for the renter, so buying is still 10,644.10 ahead. The margin is a third of the ten year one, which is the point: the shorter the stay, the less room there is for any assumption to be wrong.
Guides that go with it
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Frequently asked questions
Why is the monthly payment not the answer?
Because a mortgage payment is part cost and part saving. The interest is money spent and the capital repayment builds equity that comes back when the house is sold. Renting has no such part: the whole payment is spent, and what it buys is a place to live for that month.
The comparison here therefore runs to a horizon and asks what each path leaves you with at the end of it. That is the only way the equity, the ownership costs and the invested deposit can be counted together on the same footing.
Which costs count as ownership costs?
Everything the mortgage does not cover: property tax, buildings and contents insurance, maintenance and repairs, service charges, and any fees paid to the building or the lender. The annual figure is entered as one amount, so if you pay for a new roof every twenty years, a twentieth of it belongs in the yearly number.
Underestimating this line is the most common mistake in a rent against buy calculation, because the costs arrive irregularly. A useful check is to add up the last three years of actual spending on the property and divide by three.
Does the calculator know about tax on the gain?
No. Neither the growth of the house nor the return on the invested deposit is taxed in this model, and the two are usually treated differently: many countries exempt the main home from capital gains tax while taxing investment gains and dividends.
That difference generally favours buying, so a result that already favours buying would favour it more after tax. A result that favours renting is the one worth rechecking against your own tax rules before it is treated as settled.
What is the price to rent ratio and how is it used?
It is the purchase price divided by a year of rent, and it answers a simpler question: how many years of rent the house costs. A ratio under about 15 has historically favoured buying, a ratio over about 20 has favoured renting and investing the difference, and the range in between depends on the rest of the assumptions.
It is a rough instrument that ignores interest rates, which matter a great deal. A low ratio with a very high mortgage rate is not the bargain the ratio suggests, which is why it is shown next to the full comparison rather than on its own.