How This Rent vs Buy Calculator Works

Renting net cost is simply all the rent you pay, grown each year at the rent growth rate. Buying net cost is everything you pay — down payment, mortgage payments, property tax, insurance and maintenance — minus the equity you own at the end, which is the home's appreciated value less the remaining loan balance. Property tax grows with the home's value; insurance and maintenance grow at the rent growth rate as a general cost-growth proxy. Closing costs, selling costs, tax deductions and the investment return you could have earned on the down payment are not included, so treat a close result as a tie and weigh the non-financial factors.

Worked example (10 years): rent $1,800 a month growing 3% a year totals $247,619.79. Buying a $400,000 home with 10% down ($40,000) at 6.5% over 30 years: monthly principal and interest $2,275.44, total cash out $434,570.51 including tax, insurance and maintenance, home value after 10 years at 3% appreciation $537,566.55, remaining balance $305,194.05, equity $232,372.50. Buying net cost = $434,570.51 − $232,372.50 = $202,198.01 — about $45,421.78 less than renting over the decade, in this example.

Practical tips

Time horizon decides most comparisons.

Buying usually loses over 2–3 years once closing and selling costs are counted, and usually wins over 10+ years as equity builds. Change the horizon above before deciding anything.

Appreciation is a guess, not a return.

At 0% appreciation the same example's buying net cost rises sharply. Run your comparison at 0% and at 3% and see whether the verdict survives both.

Rent is the maximum you pay; a mortgage is the minimum.

Owners also pay for the roof, the furnace and the broken pipe. The maintenance line above is an estimate — if your home is old, raise it.

A close result is a lifestyle decision.

If the gap is small, choose on stability, mobility, job risk and whether you want to be a landlord to yourself. The calculator cannot price those.