ganak.appRent vs Buy Calculator
Compare the true cost of renting vs buying a home. Factors in mortgage, taxes, maintenance, opportunity cost, and investment returns to find your breakeven point.
Where Your Money Goes
Total costs over 10 years
Down payment ($70,000) is equity, not an expense.
Only 20% builds equity. Try shorter term or larger down payment.
Final Net Worth
Net worth after 10 years for each path
Year-by-Year Comparison
Detailed annual breakdown of buying vs renting net worth
| Year | Home Value | Net Buy Cost | Annual Rent Cost | Buying Net Worth | Renting Net Worth | Advantage |
|---|---|---|---|---|---|---|
| 1 | $350,000 | $21,237 | $21,600 | $73,130 | $69,637 | +$3,492 |
| 2 | $350,000 | $21,237 | $21,600 | $76,469 | $69,275 | +$7,194 |
| 3 | $350,000 | $21,237 | $21,600 | $80,032 | $68,912 | +$11,119 |
| 4 | $350,000 | $21,237 | $21,600 | $83,833 | $68,550 | +$15,283 |
| 5 | $350,000 | $21,237 | $21,600 | $87,889 | $68,187 | +$19,702 |
Understanding Rent vs Buy
The financial trade-off between renting and owning a home
The rent vs buy decision is one of the biggest financial choices you will make. Buying builds equity through mortgage payments and home appreciation, but comes with taxes, maintenance, and opportunity cost of your down payment. Renting preserves capital for market investments but builds no housing equity.
This calculator models both scenarios year by year, comparing your net worth as a buyer (home equity minus remaining loan and selling costs) against your net worth as a renter (investment portfolio grown from your down payment savings and monthly cost differences).
Key Formulas Used
Core calculations behind the comparison
Monthly Mortgage Payment
M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1)
Opportunity Cost (Renter Portfolio)
Portfolio = (Down Payment + Closing Costs) × (1 + monthly return)ⁿ + monthly savings invested
Buying Net Worth
Home Value − Remaining Loan − Selling Costs
How This Calculator Works
Inputs, processing, and outputs used by this page
- Enter home price, monthly rent, down payment, stay duration, interest rate, and loan term.
- Optionally adjust buying costs (property tax, insurance, maintenance, HOA, closing costs, PMI) and renting costs (rent increase, security deposit, renter's insurance).
- Set financial assumptions: home appreciation, investment return, marginal tax rate, and inflation.
- The calculator runs a year-by-year simulation comparing buying net worth vs renting net worth.
- Results show the verdict, breakeven year, monthly cost comparison, net worth chart, and detailed year-by-year table.
Real World Example
Worked example: $350K home, $1,800/mo rent, 20% down, 10-year stay
You are deciding between buying a $350,000 home with 20% down ($70,000) at 6.5% interest on a 30-year mortgage, or continuing to rent at $1,800/month. With 1.2% property tax, 1% maintenance, and 3% appreciation, the buyer builds equity over time. The renter invests the $70,000 down payment and closing costs at 7% return. After 10 years, the calculator shows which path leaves you with higher net worth.
Inputs
- Home price: $350,000
- Monthly rent: $1,800
- Down payment: 20% ($70,000)
- Mortgage rate: 6.5% for 30 years
- Stay duration: 10 years
- Investment return: 7%
Key Outputs
- Monthly mortgage P&I: ~$1,770
- Home value after 10y: ~$470,300
- Buyer equity: ~$233,000
- Renter portfolio: ~$202,000
- Breakeven: ~year 10 (varies with inputs)
Illustrative only — your results will vary based on the inputs you enter above.
The 5% Rule of Thumb
A quick mental shortcut for the rent vs buy decision
Multiply the home price by 5% and divide by 12. This gives you the monthly "breakeven rent." If your actual rent is below this number, renting may be more cost-effective. The 5% accounts for roughly 1% property tax, 1% maintenance, and 3% cost of capital (opportunity cost of your equity).
Breakeven Monthly Rent
Home Price × 5% ÷ 12
Example: $350,000 × 5% ÷ 12 = $1,458/month
Assumptions and Limitations
What this calculator includes and what it does not
Assumes a fixed mortgage rate for the entire loan term.
Home appreciation, rent increases, and investment returns are modeled as constant annual rates. Real markets fluctuate.
Tax savings are simplified as mortgage interest × marginal tax rate. Does not model standard deduction thresholds or local tax variations.
Does not account for utility differences, home improvement capital gains, or rental income potential.
Selling costs apply at the end of the stay period. Early sale or refinancing is not modeled.
Default values are illustrative averages. Adjust them to match your local market for accurate results.
Common Mistakes
Frequent errors that distort the rent vs buy comparison
Comparing only mortgage payment to rent while ignoring property tax, insurance, maintenance, and HOA.
Ignoring the opportunity cost of the down payment — that money could be earning investment returns.
Assuming home appreciation will always be high. Markets can be flat or decline for years.
Not factoring in selling costs (5%–6%) when calculating home equity at exit.
Overlooking PMI costs when putting less than 20% down — it can add hundreds per month.
Frequently Asked Questions
Common questions about renting vs buying a home