How the rent vs buy calculator works
The calculator adds up everything you spend and give up on each side over the years you stay, then subtracts what you get back when you sell.
Renting = Sum of rent, rising each year
Selling costs are assumed to be 6% of the future price for agent and closing fees. "Lost returns" is what the down payment and closing costs would have earned if invested instead. The model uses a 30-year fixed mortgage and does not include tax deductions for mortgage interest, which only help if you itemize, or renter's insurance. Buying usually wins the longer you stay, because closing and selling costs get spread over more years.
Worked example
For a $400,000 home with 20% down at 6.5%, the principal and interest payment is $2,022.62 a month. Staying 7 years with 3% appreciation, 2% yearly ownership costs and a 5% return on cash, buying costs about $187,600 after the sale proceeds. Renting at $2,200 a month rising 3% a year costs about $202,300, so buying comes out about $14,700 ahead. Shorten the stay to 3 years and renting wins by about $20,000.
Frequently asked questions
Is it cheaper to rent or buy?
It depends on how long you stay, local price-to-rent ratios, rates and appreciation. Buying usually wins after about five to seven years.
What is the price-to-rent ratio?
Home price divided by a year's rent. Above about 20, renting tends to be relatively cheaper.
Why include investment returns?
Money tied up in a down payment could earn returns elsewhere, which is a real cost of buying.
Does this include tax benefits?
No. The mortgage interest deduction only helps if your itemized deductions exceed the standard deduction.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.