Calculator 06
Rent vs Buy
Over a holding period, with every assumption on the page rather than buried in the maths. Illustrative figures only.
Both lines are labelled on the plot. Where the owning line rises above the renting line is the crossover; the dashed vertical mark shows it.
This chart ignores equity entirely — it is only what leaves your account. Owning usually costs more here and still wins overall, which is the whole point of the chart above.
After 7 years, buying is
-$32,825
behind renting, under these assumptions.
- Owning pulls aheadnot within the hold
- Monthly principal & interest$2,418
- Cash needed at purchase$76,500
- Rent paid in total$216,081
- Owning costs in total$310,124
- Home value then$553,443
- Balance still owed$345,842
- Equity after selling costs$168,860
This model does not include the tax treatment of mortgage interest, mortgage insurance, HOA dues, moving costs, or the value of being able to leave at thirty days' notice. Some of those favour buying and some favour renting.
| Year | Rent paid | Renter net | Home value | Balance | Owner net | Difference |
|---|---|---|---|---|---|---|
| At purchase | $0 | $0 | $450,000 | $382,500 | -$40,500 | -$40,500 |
| Year 1 | $28,200 | -$24,375 | $463,500 | $378,225 | -$66,833 | -$42,458 |
| Year 2 | $57,246 | -$49,405 | $477,405 | $373,663 | -$92,864 | -$43,459 |
| Year 3 | $87,163 | -$75,105 | $491,727 | $368,796 | -$118,574 | -$43,469 |
| Year 4 | $117,978 | -$101,492 | $506,479 | $363,603 | -$143,942 | -$42,450 |
| Year 5 | $149,718 | -$128,582 | $521,673 | $358,062 | -$168,946 | -$40,364 |
| Year 6 | $182,409 | -$156,392 | $537,324 | $352,150 | -$193,561 | -$37,170 |
| Year 7 | $216,081 | -$184,938 | $553,443 | $345,842 | -$217,764 | -$32,825 |
Illustrative figures. Every number on this page — including the rates in the default values — is an illustration produced from the inputs above. Nothing here is a quote, a rate lock, an APR, a Loan Estimate or an offer of credit.
What this page assumes. A fixed-rate mortgage held for the whole period, purchase closing costs of 2% of the price, illustrative insurance of $1,800 a year, no HOA dues, the renter investing exactly the buyer's up-front cash at the return you set, and appreciation and rent inflation applied evenly every year. Real markets do none of these things evenly, and no tax treatment of mortgage interest is modelled.
This calculator provides estimates for educational purposes only. Results are not a Loan Estimate, pre-approval, or commitment to lend, and may not reflect taxes, insurance, HOA dues, or other costs. Contact a loan officer for an accurate quote.
Rates shown are for illustrative purposes only, are not a quote or guarantee, and do not reflect a specific offer. Actual rates depend on credit score, loan amount, loan-to-value, occupancy, and other factors, and change daily. Contact us for a personalized rate quote.
Your inputs live in this page’s web address. Copy the link and whoever opens it lands on exactly these numbers — no account, no saved data, nothing tracked.
Have a loan officer look at these numbers
A calculator can only work with what you type. If you would like a person to sanity-check the assumptions, this is the form a real site would use.
The other calculators
All calculators- Monthly paymentMortgage Payment CalculatorPrincipal, interest, tax, insurance, HOA and PMI — itemised.
- AmortisationAmortization ScheduleEvery payment, month-wise or year-wise, with running totals.
- AffordabilityAffordability CalculatorIncome, debts and DTI to a price range — and which limit binds.
- RefinanceRefinance & Break-Even CalculatorNew rate against costs, and the month it pays itself back.
- Extra paymentsExtra Payment CalculatorOne-off and recurring overpayments, interest saved, months removed.
Calculator FAQ
Questions about renting versus buying
How is "ahead" defined here?
Both paths are measured the same way: the change in your net worth since the day of the transaction. The buyer's wealth is what a sale would leave after selling costs and the outstanding balance, less every dollar of housing cost paid along the way. The renter starts by investing exactly the cash the buyer handed over at closing, earns the return you set, and pays rent out of the same pocket. Neither side gets a free head start.
Why does buying start so far behind?
Because buying and selling a house is expensive. Purchase closing costs and the agent and transfer costs on the way out are both real money, and on day one they are the entire story. That is the hole appreciation and principal repayment have to climb out of, and it is why a short hold usually favours renting even in a rising market.
What is the opportunity return, and why does it matter so much?
It is what the renter earns on the cash they did not spend on a down payment. It is one of the two assumptions this calculator is most sensitive to — the other is appreciation. Set it high and renting looks strong; set it at zero and buying looks unbeatable. Both are guesses about the future, which is exactly why they are fields you control rather than numbers hidden in the code.
Does this include the tax treatment of mortgage interest?
No. Deductibility depends on whether you itemise, on your bracket, on state rules and on caps that change, and inventing a single number for it would make the result look more precise than it is. If the deduction applies to you it tilts the comparison towards buying, so treat the crossover year shown here as slightly conservative for owners who itemise.
Does it account for maintenance, HOA and insurance?
Maintenance, property tax and insurance, yes — maintenance as a percentage of the home value each year, which is the usual rule of thumb and is a field you can change. Renters are assumed to pay none of these directly. What the model cannot capture is a new roof in year three or a special assessment, and those are common enough to be worth a margin.
What does the crossover year actually tell me?
It is the first year in which owning has caught up with renting under your assumptions. If you are confident you will stay well past it, buying looks reasonable; if your plans are uncertain around it, the comparison is too close to call and flexibility has real value. It is a decision aid, not an answer.
Leaning towards buying?
The next question is what you would actually qualify for. A loan officer can answer that in a conversation.