# Rent vs Buy Calculator

> Find the year buying overtakes renting from your rent, mortgage, property tax, upkeep, transaction costs, home value change and returns.

Page: https://freecalculator.tech/tools/rent-vs-buy-calculator
Last reviewed: 2026-11-03

## Formula

Each month: owner cost = mortgage payment + (property tax % + maintenance %) × home value ÷ 12. Whoever pays less invests the difference at your return. Buyer wealth = value × (1 − selling %) − mortgage balance + buyer's investments. Renter wealth = invested down payment and buying costs + monthly differences. Breakeven = first year buyer wealth ≥ renter wealth.

- Mortgage payment uses the standard amortization formula M = P·r ÷ (1 − (1 + r)^−n).
- Taxes on gains, mortgage interest deductions and rent deposits are not modelled.
- Each month: owner cost = mortgage payment + (property tax % + maintenance %) × home value ÷ 12. Whoever pays less invests the difference at your return. Buyer wealth = value × (1 − selling %) − mortgage balance + buyer's investments. Renter wealth = invested down payment and buying costs + monthly differences. Breakeven = first year buyer wealth ≥ renter wealth.
- Inputs used: Monthly rent, Yearly rent increase, Home price, Down payment, Mortgage interest rate, Mortgage term, Property tax per year, Maintenance and insurance per year, and other shown inputs.

## Inputs

- Monthly rent
- Yearly rent increase
- Home price
- Down payment
- Mortgage interest rate
- Mortgage term
- Property tax per year
- Maintenance and insurance per year
- Buying costs
- Selling costs
- Home value change per year
- Return on money not put into the home
- Currency (symbol only, never converted)

## Worked example: Rent 2,000 vs a 400,000 home

With 80,000 down at 6.5% for 30 years and the other figures shown, buying overtakes renting in year 10.
1. Mortgage payment on 320,000 at 6.5% over 360 months ≈ 2,022.62.
2. Owner cost in month 1 ≈ 2,022.62 + 2% × 400,000 ÷ 12 ≈ 2,689.29.
3. Track both sides' wealth each year; buying first comes out ahead in year 10.

## Common questions

### Why isn't there a default rate or appreciation?

These depend on your market and are uncertain, so you enter your own. Try a few values to see how sensitive the answer is.

### Does it include tax benefits?

No. Mortgage interest deductions and capital gains rules differ by country and are not included.

### What counts as buying and selling costs?

Fees, transfer taxes, agent commissions and similar one-off costs, as a percentage of the price.

### How do I use the Rent vs Buy Calculator?

Enter the required values for Monthly rent, Yearly rent increase, Home price, Down payment, Mortgage interest rate, and the other fields shown. The calculator applies the formula on this page and shows the main result with any supporting breakdown so you can check the arithmetic.

### What formula does the Rent vs Buy Calculator use?

Each month: owner cost = mortgage payment + (property tax % + maintenance %) × home value ÷ 12. Whoever pays less invests the difference at your return. Buyer wealth = value × (1 − selling %) − mortgage balance + buyer's investments. Renter wealth = invested down payment and buying costs + monthly differences. Breakeven = first year buyer wealth ≥ renter wealth. The visible formula section above lists the calculation path and the edge cases the page handles, so the result can be checked without relying on the form alone.

### Can the Rent vs Buy Calculator be used for exact decisions?

Use it as a calculation aid, not as a substitute for checking the underlying rule, contract, policy, or professional advice that applies to your situation. When a result depends on local rules, personal details, prices, or dates, enter those values yourself and confirm them before acting.

## Limitations and assumptions

- No taxes on gains or deductions.
- All rates are held constant for the whole term.
- Ignores renter's insurance, deposits and moving costs.
- An estimate built only from the figures you enter. It is not financial, tax, legal or employment advice, and real costs, taxes and returns vary.
- The result depends on the values you enter for this rent vs buy calculator; it does not supply missing rates, rules, prices, dates, or assumptions for you.

## Sources

- OpenStax — https://openstax.org/books/principles-finance/pages/7-6-loan-amortization

## Cite this page

- APA: Free Calculator. (2026, November 3). Rent vs Buy Calculator. https://freecalculator.tech/tools/rent-vs-buy-calculator
- MLA: "Rent vs Buy Calculator." Free Calculator, 3 Nov. 2026, https://freecalculator.tech/tools/rent-vs-buy-calculator.
- Link: Rent vs Buy Calculator — Free Calculator, https://freecalculator.tech/tools/rent-vs-buy-calculator