Rent vs buy calculator
Compare the true cost of buying a home with renting and investing the difference over the years.
Results
Buying saves
$31,879.14
After 10 years, buying leaves you this much better off than renting, counting your share of the home and what a renter could invest.
- Overall cost of buying over 10 years
- $126,155.17Down payment, mortgage and upkeep, minus your share of the home and investment gains
- Overall cost of renting over 10 years
- $158,034.31Rent paid, minus investment gains
- Buying becomes cheaper after
- 1 year
- Monthly mortgage payment
- $2,022.62
- Home value after 10 years
- $537,566.55
- Your share of the home after 10 years
- $266,282.95Home value minus what is left on the mortgage
Note: Buying and selling costs, taxes and tax reliefs are not included.
Overall cost of buying and renting
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How it works
We follow a buyer and a renter month by month. The buyer pays the mortgage and the running costs of the home; the renter pays rent, which rises once a year. Whoever spends less in a month invests the difference, and the renter also invests the down payment from day one. The overall cost of each path is what was spent minus what was built up, so the cheaper path leaves you better off.
Formula
- Upkeep each month = home value × upkeep % ÷ 12
- Overall cost of buying = down payment + mortgage payments + upkeep − (home value − loan balance) − investment gains
- Overall cost of renting = rent paid − investment gains
- Investment growth per month = (1 + yearly return)^(1 ÷ 12) − 1
- Buying becomes cheaper in the first year where overall cost of buying ≤ overall cost of renting
Frequently asked questions
Why does renting include investment gains?
Buying ties up money in a down payment and, often, in higher monthly costs. A renter could invest that money instead. Counting those gains makes the comparison fair, because both paths then start with the same cash and spend it in different ways.
What is left out of this comparison?
Costs of buying and selling, such as transfer or stamp taxes, legal and agent fees, are not included, and neither are taxes on investment gains or any tax relief on mortgage interest. These differ widely between countries. Including them usually pushes back the year buying becomes cheaper by a few years.
What does “buying becomes cheaper after” mean?
It is the first year in which owning has cost you no more than renting, once your share of the home and any investment gains are counted. If you expect to move before then, renting is likely to be cheaper. If no year is shown, buying doesn't catch up within the period you chose.
What should I enter for ownership costs?
Add up the yearly cost of repairs and maintenance, property or council tax, home insurance and any building fees, then divide by the home's price. Many owners find this lands between 1% and 3% of the home's value each year.
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- Inflation calculatorSee what something will cost in the future, or what it cost in the past, at a steady inflation rate.
Results are estimates only, not financial advice. Read the disclaimer.