Rent vs Buy Calculator
This rent vs buy calculator compares whether you end up with more wealth after some years by owning a home or by renting. It weighs the mortgage, closing costs and upkeep against rent and the investment of the cash you would not tie up in a house.
Source: Wikipedia – Amortization calculator / Annuity (level payment formula). Updated: .
How it is calculated
Whether buying or renting is better is decided by a wealth comparison over many years – not by the monthly payment alone. The calculator puts both paths side by side and shows when buying starts to pay off.
How it is calculated
- Buying: the loan covers the price and closing costs minus your down payment and is repaid with level payments. Upkeep is added as a percentage of the current value. Wealth = home value minus selling costs minus the loan balance.
- Renting: your savings, including the money that would have gone on closing costs, are invested. The renter also invests each month what the owner pays above the rent (or withdraws if the rent is higher). Wealth = value of this portfolio.
- Break-even point: the first year from which the owner's wealth stays ahead to the end.
What matters most
Appreciation, investment return, interest rate and how long you stay matter most: closing and selling costs are lost early, so buying usually pays off only after many years. For the financing itself, see the mortgage calculator and the loan calculator; the buying costs are covered by the property purchase costs calculator. If you want to let a property, check the rental yield.
Frequently asked questions
When does buying beat renting?
It depends on price, interest rate, rent, appreciation and investment return. Because of closing costs, the break-even point is usually ten years or more. The calculator shows the year from which buying stays ahead.
Why is money invested in the renting case?
A renter has not tied the savings and the monthly difference up in a house and can invest both. Without this counter-calculation the comparison would unfairly favor the buyer.
Which costs of buying are included?
Closing costs, mortgage interest, upkeep and selling costs. Property tax, insurance and community fees are not listed separately; you can add them to upkeep.
How realistic is the appreciation?
It is the most uncertain assumption. Property prices can stagnate or fall for years. Try several values, such as 0, 1 and 2 % a year, and look at the range of results.
Does the calculator include taxes?
No. Tax effects such as depreciation for rentals or taxes on investment gains are left out on purpose. For a concrete decision, get individual advice as well.
Sources and legal basis
As of: · Editorial policy
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