Rent vs Buy Calculator
Not which monthly payment is lower — which one actually costs less over time, once interest, maintenance, selling costs and the equity you build are all counted.
Under these assumptions
Enter a rent and a home price to compare.
Nothing entered yet
Educational estimate, computed in your browser from the figures you enter. Not financial advice, not a prediction, and not a mortgage offer.
Cumulative cost by year
Total cost so far if you moved out, or sold, at the end of that year — years along the bottom, dollars up the side. Lower is better, and the lines crossing is the break-even point.
| Year | Renting | Buying | Equity | Loan left | Cheaper |
|---|
Your numbers
The page opens on a worked example so the chart has something to show. Every field is yours to change.
What each side actually pays
Totals over the comparison period.
| Buying | Total |
|---|
| Renting | Total |
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Keep this result
Copied as plain text. Nothing is uploaded, and no link containing your figures is created unless you ask for one.
How this comparison works
What “cost” means here
Cost is the cash you paid out, minus what you get back at the end. That single rule is applied to both sides, which is what makes them comparable.
Why the mortgage payment is not the cost of owning
Part of every mortgage payment is interest, which is gone. The rest is principal, which pays down your loan and comes back to you when you sell. Treating the whole payment as a cost overstates owning. But the quoted payment also leaves out property tax, insurance, HOA, maintenance and PMI, which understates it. Those two mistakes do not cancel out, so this tool avoids both: principal is treated as money moved into equity, and every real cost is counted separately.
How equity and selling are treated
At the end of the period the home is assumed to be sold. You get its value at that point, minus whatever you still owe, minus the cost of selling — agent commission, transfer taxes, title and legal work, set here at 7% by default. That net figure is credited against everything you paid. If you sell early, those selling costs land on a small number of years and can easily wipe out the equity you built.
Where the property tax and insurance figures come from
Pick a state and the property tax rate fills in from that state’s effective rate — the share of a home’s value actually paid in tax, which is the figure worth comparing across states. Pick a county and it narrows further, because rates vary enormously inside a state: Connecticut averages 1.54%, but Hartford County runs closer to 2.10%. We hold county rates for the larger counties in 31 states. Where we hold none, the state average stands and the calculator says so rather than pretending to a precision it does not have.
Homeowners insurance uses the same method as the home affordability calculator: each state has an average annual premium quoted at $300,000 of dwelling coverage, and that premium is scaled to your home. Dwelling coverage is roughly what it would cost to rebuild the structure, about 80% of the price, because the land underneath does not burn down. A $260,000 home therefore carries about 69% of the quoted premium. Both calculators run this from one shared table, so they cannot drift apart.
Both figures are estimates and both are editable. Actual property tax depends on the assessment on that specific parcel, on exemptions you may qualify for, and on whatever the local district voted for last year. Actual insurance depends on the roof, the claims history, the distance to a fire hydrant, and increasingly on wildfire and flood exposure that state averages flatten out entirely. If you have a real tax bill or a real quote, type it in — the estimate exists so you are not stuck without one, not to replace the real number.
How appreciation is handled
The home’s value grows at the rate you set, compounded monthly. Property tax and the maintenance reserve are calculated on that growing value, because assessments and repair bills follow it. Appreciation is an assumption you control, not a forecast. Set it to 0% to see what happens if prices go nowhere, or to a negative number to see a downturn.
How rent growth is handled
Rent rises at the rate you set. So do the ownership costs that track inflation — insurance, HOA and utilities. Growing rent while freezing ownership costs is the most common way a rent-versus-buy calculator quietly ends up recommending a purchase, and this one does not do it.
Where the rental’s utilities figure comes from
From you. The optional breakdown adds up electricity, gas, water, sewer, trash, internet and anything else using exactly the same rule as the Rent Reality Calculator, and puts the total in the utilities box. It is a calculator, not a price list — HonestAfford holds no utility price data, so nothing is filled in with a regional average. Type one number instead if you already know it; whichever you touched last is the one used.
How opportunity cost is handled
Buying usually locks up a lot of cash. If you rented instead, that money could sit in an investment. When you switch the option on, the model gives whichever side has the lower outflow in a given month the chance to invest the difference at the return you set, and credits back only the gains — the money itself is already reflected in that side’s lower spending. Both sides are treated identically. It is off by default because the headline answer should not rest on a guess about market returns.
What the break-even year means
It is the first full year at which buying’s total cost has fallen to or below renting’s, assuming you sell at that point. Before it, renting cost less. After it, buying does. If that never happens inside the period you chose, the tool says so rather than inventing a year.
What this does not include
Mortgage interest and property tax deductions, which only help if you itemise. Capital gains treatment on a sale. Mortgage insurance on FHA loans, which behaves differently from conventional PMI. Rent control, special assessments, refinancing, or the possibility of renting a room out. It also cannot price the things that usually decide the question anyway: stability, control over where you live, the freedom to move for a job, or how you would feel about a repair bill arriving on a Tuesday.
This is an educational estimate produced from figures and assumptions you supplied. It is not financial advice, not a prediction, and not an offer of credit. Renting is not throwing money away, and buying is not automatically an investment — which is cheaper depends entirely on the numbers above and how long you stay.
Common questions
Is buying always cheaper than renting in the long run?
No. Buying carries costs that renting does not: mortgage interest, property tax, insurance, maintenance, PMI, closing costs on the way in and selling costs on the way out. Those have to be outweighed by equity and appreciation before buying wins. Under a typical set of assumptions that takes several years, and if you sell early, or prices are flat, or the purchase costs are high relative to the rent, it may never happen. This calculator will tell you plainly when buying does not break even inside your horizon rather than forcing a result.
Why is comparing the mortgage payment to the rent misleading?
Two reasons. A mortgage payment is not all cost — the principal portion moves your money into equity, and you get it back when you sell, so counting the whole payment as a cost overstates the cost of owning. At the same time the quoted payment leaves out property tax, insurance, HOA, maintenance and PMI, which understates it. The two errors do not cancel. This tool separates them: principal is treated as savings, and every genuine cost is counted.
How does this calculator define the cost of buying?
Cost is cash paid out minus what you get back at the end. For buying that is the down payment, closing costs, points and initial repairs, plus every monthly payment made, minus the net proceeds of selling — the home’s value at that point less the outstanding loan balance and less the cost of selling. Because principal payments come back to you inside those proceeds, they are effectively not a cost. Interest, tax, insurance, HOA, maintenance and PMI are.
How is the security deposit treated?
As money you get back. It is counted in the cash you need up front, which matters for comparing against a down payment, but it is credited back at the end, so it does not count as a cost of renting. Application fees, broker fees and moving costs are genuine costs and are not refunded.
What is the opportunity cost option and should I turn it on?
Buying usually ties up a large amount of cash in a down payment. If you rented instead, that money could be invested. The opportunity cost option models this: in any month where one side pays out less than the other, the difference is assumed to be invested at the return you specify, and only the investment gains are credited back to that side. It is symmetric — the buyer gets the same treatment when their monthly outlay is lower. It is off by default because the return is an assumption, not a fact, and the headline number should not depend on a guess about markets. Turning it on generally favours renting, sometimes substantially.
Are the appreciation and investment return figures predictions?
No. They are assumptions you choose, and the result is only ever valid under the assumptions shown on screen. Home prices fall as well as rise, and you can enter a negative appreciation rate to see what that does. Nothing here is a forecast, a guarantee, or financial advice.
Where do the property tax and insurance estimates come from?
Choosing a state fills in that state’s effective property tax rate and its average homeowners premium, from the same tables the home affordability calculator uses. Choosing a county replaces the state tax rate with a county estimate where we hold one, which matters because rates vary widely inside a state. Insurance is quoted at $300,000 of dwelling coverage and scaled to your home price, on the basis that dwelling coverage is about 80% of price — land does not need rebuilding. Both fields stay editable, and a real tax bill or a real quote beats any estimate.
When does PMI stop in this model?
When the loan balance falls to 80% of the original purchase price. Appreciation is deliberately not counted toward that, because removing PMI on the basis of a higher valuation requires a new appraisal and the lender’s agreement, and cannot be assumed. This is the conservative treatment: it means the model may charge PMI for slightly longer than you actually pay it.
The other two calculators
This page compares a rental you have already priced against a home you have already priced. These work out those two numbers.
Rent Reality Calculator — what an apartment really costs · How much house can I afford? · All guides · Methodology