Rent vs. Buy Calculator

How it works

A fair rent-versus-buy check compares your rent against the full monthly cost of owning, not just the mortgage. This calculator takes the loan after your down payment, finds the principal and interest, then adds a rough allowance for tax, insurance, and upkeep of about 1.25% of the price a year:

With the defaults, a $320,000 loan at 7% over 30 years is about $2,129 a month, plus roughly $417 for tax, insurance, and maintenance, so owning runs about $2,546 against $2,200 in rent. Renting is about $346 a month lighter here, which adds up to roughly $29,000 over a 7-year stay. The comparison is cash-only on purpose, so it leaves out appreciation and the equity you build.

✓ Every result is checked against independent reference math. See how we test the calculators →

A worked example: $2,200 rent vs. a $400,000 home

Weigh a $2,200 monthly rent against buying a $400,000 home with 20% down at a 7% mortgage rate, and plan to stay seven years. Over that stretch, renting comes out ahead. The estimated cost of owning runs about $2,546 a month, versus your $2,200 rent.

That $346 monthly difference stacks up. Across seven years it adds to roughly $29,033 that stays in your pocket by renting instead of owning. Keep in mind what this leaves out: it ignores home appreciation, the equity you build with each payment, and the opportunity cost of tying up your down payment.

So the raw monthly math favors renting, but the long-game factors could tilt it the other way in a rising market. Enter your own rent, price, and how long you plan to stay to see which side wins for you.

Reading the comparison honestly

• It is cash flow, not wealth. Owning builds equity and can appreciate, neither of which shows up here. A slightly higher monthly cost can still come out ahead over many years.
• The down payment has a cost too. Money tied up in a house is money not invested elsewhere. That opportunity cost is real and works in renting's favor.
• Time changes everything. Buying rewards staying put, because the upfront cost spreads over more years. If you might move within a few years, renting often wins outright.

The price-to-rent shortcut

Before running full costs, there’s a fast sanity check the pros use: the price-to-rent ratio. Divide the home’s price by a full year of rent for a comparable place, and the result hints at whether a market favors buying or renting without touching a mortgage table.

• Around 15 or below. Buying tends to look favorable, since prices are low relative to what renting the same home costs each year.
• Roughly 16 to 20. A gray zone where the decision leans on how long you’ll stay and what you expect prices to do.
• Above 21. Renting is often the better cash deal, because prices are steep next to rents and it takes a long time for buying to catch up.
• Use it to frame, not to decide. The ratio is a first filter. This calculator’s full monthly comparison is the follow-up once the ratio says a market is worth a closer look.

What the 1.25% carry estimate covers

To compare owning against renting fairly, this calculator adds more than the mortgage. It tacks on roughly 1.25% of the price a year to stand in for the ongoing costs of ownership that rent doesn’t carry. That single allowance rolls up a few real bills.

• Property tax. Usually the largest slice, and it varies widely by location, so high-tax areas make owning look worse than this average assumes.
• Homeowners insurance. Required by any lender and a real annual cost that a renter simply doesn’t pay.
• Maintenance. The upkeep a landlord would normally handle, which becomes your bill the moment you own.
• When to override it. If your actual taxes or dues run well above or below the norm, treat 1.25% as a placeholder and adjust your read of the result accordingly.

Why the mortgage rate swings the answer

Of all the inputs, the mortgage rate moves the verdict the hardest, because it acts on the largest number in the whole comparison. A change of even a point or two reshapes the monthly payment enough to flip which option looks cheaper.

The reason is that interest, not principal, dominates the early years of a mortgage payment. At higher rates a bigger share of every dollar goes to the lender rather than to your own equity, which both raises the monthly cost and weakens the case that owning is really buying you something. When rates are low, owning often edges out renting on pure cash flow; when rates are high, renting frequently wins the monthly comparison outright, even if buying can still pull ahead over many years through equity and appreciation.

That’s why it’s worth running the calculator at a couple of rates you might realistically get.

The horizon that flips the answer

This comparison is a monthly snapshot, but the real decision turns on how many of those months you’ll stack up. The number of years you stay is often what decides whether renting or buying comes out ahead.

• Short stays favor renting. The upfront cost of buying has little time to spread out, and selling within a few years can eat any early gains in fees.
• Long stays favor buying. Given enough years, equity and appreciation usually overtake the monthly premium, even when renting looked cheaper at first.
• Match the choice to your plans. If a job or family change could move you soon, weight the decision toward renting regardless of the monthly figures.