Rent or buy calculator

What buying a home and renting a similar one leave you with, year by year, and the year buying pulls ahead, if it ever does.

Buying pulls ahead in year

and stays ahead through year 30

Payment $1,896.20 a month
Cash to close $86,250

With these numbers, buying pulls ahead in year 5 and stays ahead. After 30 years, the buyer has about $393,709 more than a renter who invests the difference.

Up front, the buyer spends $86,250 on the down payment and buying costs; the renter invests the same amount at 5% a year. Then, each month, whoever spends less invests the difference.

I’m not an accountant or a financial advisor. This is an estimate, for information only. Check with a professional before you decide.

Your numbers

example: change the numbers

Currency

This changes the symbol and the examples. It does not convert your numbers.

Home price

The price of the home you’d buy.

Down payment

The part of the price you pay from savings; the rest is the mortgage. In the UK: your deposit.

Mortgage rate

The yearly interest rate on your loan offer.

Loan term

The comparison runs for the whole loan term.

Buying costs

Closing costs, as a share of the price: the CFPB puts them at 2% to 5% in the US. In the UK, stamp duty, legal and survey fees go here. A renter keeps this money and invests it.

Owner costs per year

Property tax, homeowners insurance, upkeep and HOA dues, as a share of the home’s value. The example uses 1% + 0.5% + 1%. In the UK, leave out council tax: renters pay it too.

Rent for a similar home

What you’d pay each month to live in a home like this one.

Rent increase per year

How much the rent goes up each year.

Return on savings, after tax

What the money a renter doesn’t spend could earn in a year, after tax and fees. An assumption, not a promise.

Home value growth per year

How much the home’s value changes each year. It can be negative.

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What you’d have, year by year
Year	If you buy	If you rent	Difference	Monthly rent
1	$89,603	$99,031	−$9,427	$2,000.00
2	$104,768	$112,006	−$7,238	$2,060.00
3	$120,521	$125,173	−$4,652	$2,121.80
4	$136,887	$138,527	−$1,640	$2,185.45
5	$153,895	$152,063	+$1,832	$2,251.02
6	$171,574	$165,777	+$5,797	$2,318.55
7	$189,954	$179,661	+$10,293	$2,388.10
8	$209,069	$193,709	+$15,360	$2,459.75
9	$228,952	$207,914	+$21,038	$2,533.54
10	$249,640	$222,266	+$27,374	$2,609.55
11	$271,171	$236,756	+$34,415	$2,687.83
12	$293,585	$251,374	+$42,211	$2,768.47
13	$316,924	$266,108	+$50,816	$2,851.52
14	$341,234	$280,946	+$60,288	$2,937.07
15	$366,560	$295,873	+$70,687	$3,025.18
16	$392,954	$310,875	+$82,079	$3,115.93
17	$420,951	$326,419	+$94,532	$3,209.41
18	$450,860	$342,740	+$108,120	$3,305.70
19	$482,797	$359,877	+$122,921	$3,404.87
20	$516,888	$377,870	+$139,017	$3,507.01
21	$553,262	$396,764	+$156,498	$3,612.22
22	$592,058	$416,602	+$175,456	$3,720.59
23	$633,424	$437,432	+$195,992	$3,832.21
24	$677,515	$459,304	+$218,211	$3,947.17
25	$724,496	$482,269	+$242,227	$4,065.59
26	$774,541	$506,383	+$268,158	$4,187.56
27	$827,835	$531,702	+$296,133	$4,313.18
28	$884,572	$558,287	+$326,286	$4,442.58
29	$944,961	$586,201	+$358,760	$4,575.86
30	$1,009,220	$615,511	+$393,709	$4,713.13

How it works

Up front, the buyer pays the down payment plus the buying costs. The renter keeps the same amount and invests it.
Every month, the buyer pays the mortgage (a fixed payment) plus owner costs; the renter pays rent, which goes up every year. Whoever spends less that month invests the difference. That way the same money leaves both pockets, and only the choice is compared.
Savings grow at the after-tax return you set, the home’s value changes at its own rate, and the loan balance goes down with every payment.
At the end of each year, the two are compared. If you buy, you have the home’s value minus what you still owe, plus your savings; if you rent, you have your savings. Buying pulls ahead in the first year it comes out on top and stays there until the end of the loan.

Worked example

A $375,000 home with $75,000 down (20%): a $300,000 loan at 6.5% for 30 years is $1,896.20 a month. Buying costs of 3% ($11,250) bring the cash to close to $86,250; the renter invests that at 5% a year after tax. Owner costs of 2.5% a year start at about $781 a month; rent for a similar home is $2,000, up 3% a year; the home gains 3% a year. After 4 years, the renter is still ahead by $1,640; in year 5, buying pulls ahead by $1,832, and the gap keeps growing: after 30 years it’s about $393,709, with the loan paid off.

Sources

Text checked on September 30, 2026

Good to know

Every number here is an assumption you can change, not a prediction. The most sensitive are the return on savings and the home’s growth: move either one by a point and watch the year change. The CFPB suggests trying several scenarios.
The return should be what’s left after tax and fees, and it only counts if the renter really invests the difference, every month, for all those years.
Selling costs aren’t counted: if you sell early, agent fees and moving costs push the year further out. Mortgage insurance and tax deductions aren’t counted either.
The home’s gain is treated as tax-free, which is usually true for a main home. In the US, you can exclude up to $250,000 of gain ($500,000 on a joint return) if you owned it and lived in it for 2 of the last 5 years; in the UK, Private Residence Relief usually means no Capital Gains Tax.
No calculator can weigh the feeling of a home of your own, or the freedom to move when you want. They’re real too: put them on the scale yourself.

Frequently asked questions

Is it better to rent or buy?

It depends on how long you’ll stay, how rents compare with prices where you live, your mortgage rate and what your savings could earn. Buying has big costs up front, so it needs time to catch up. With the example’s numbers, it pulls ahead in year 5; with rent of $1,200 instead of $2,000, renting stays ahead for all 30 years. Your own numbers are the ones that count: change them above.

Is paying rent throwing money away?

Not really. Owners have costs they never get back too: mortgage interest, closing costs, property tax, insurance and repairs. The fair comparison is those costs against rent, and that’s what this calculator does, year by year.

Why does the return on savings matter?

Because a renter doesn’t spend the down payment and closing costs, and can invest them, along with any monthly savings. The more that money earns, the later buying catches up: with the example’s numbers and a 6% return instead of 5%, buying pulls ahead in year 8 instead of year 5.

How much does the mortgage rate change the answer?

A lot. A higher rate means a bigger payment, so the renter invests more each month and buying takes longer to catch up. In the example, 7% instead of 6.5% moves the year from 5 to 8; 6% brings it to year 3.

What goes into owner costs?

Everything a renter doesn’t pay: property tax, homeowners insurance, maintenance and repairs, HOA or condo fees. The example uses 1% of the home’s value for property tax, 0.5% for insurance and 1% for upkeep; check the tax rate where you’re buying. In the UK, leave out council tax: the adults who live in a home pay it, renters included.