Rent vs Buy Calculator Guide

How to Use a Rent vs Buy Calculator

A rent vs buy calculator compares total costs over time. Here's the process:

1. Enter rental costs — Current rent, expected increases, renter's insurance
2. Enter buying costs — Home price, down payment, rate, taxes, insurance, maintenance
3. Set your timeline — How many years you plan to stay
4. Review results — See total costs, break-even point, and net wealth comparison
5. Adjust assumptions — Test different scenarios to understand sensitivity

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The rent vs buy calculator takes the guesswork out of one of life's biggest financial decisions. Instead of relying on rules of thumb or emotional arguments, you can see the actual numbers for your specific situation.

But a calculator is only as good as your inputs. This guide walks you through each field, explains what values to use, and shows you how to interpret the results—including the pitfalls that trip up most people.

Step 1: Enter Your Rental Scenario

Start with the rental side. These inputs establish what you'd pay if you continued renting instead of buying.

Monthly Rent

Enter what you currently pay or what you'd pay for a comparable rental to the home you're considering buying. Be realistic—if you're comparing a $500,000 house, compare it to a similar rental, not a studio apartment.

Example: You're considering a 3BR house for $450,000. Similar rentals in the area go for $2,400/month. Enter $2,400.

Annual Rent Increase

Rent typically increases 3-5% per year, though this varies by market. In rent-controlled areas, it may be capped at 2-3%. In hot markets, 5-7% isn't uncommon. Check your local trends.

Recommended: Use 3% for conservative markets, 4% for average markets, 5% for high-growth areas. When in doubt, use 4%.

Renter's Insurance

Most renters pay $15-30/month for insurance. This is a small but real cost of renting that should be included.

Typical value: $20/month or $240/year

Don't forget utilities: If your current rent includes utilities but the home you're buying doesn't, factor that difference into your comparison. The calculator typically assumes similar utility costs either way.

Step 2: Enter Your Buying Scenario

The buying side has more inputs because homeownership has more costs. Take your time here—underestimating any of these will make buying look artificially attractive.

Home Price

The purchase price of the home you're considering. Use actual listing prices from your market, not wishful thinking.

Tip: If you're not sure, search Zillow or Redfin for homes that match what you'd realistically buy.

Down Payment

How much you'll put down. This affects your loan amount, monthly payment, and whether you'll pay PMI. Enter as a percentage or dollar amount.

• 5% — Minimum conventional
• 10-15% — Reduced PMI
• 20% — No PMI (ideal)

Mortgage Interest Rate

Your expected mortgage rate. Use the rate you actually qualify for, not the lowest advertised rate. Get pre-approved to know your real number.

January 2026 context: Most buyers are seeing 6.25-7.0% depending on credit score, loan type, and down payment. Use 6.5% if unsure.

Property Tax Rate

Annual property taxes as a percentage of home value. This varies dramatically by location—from 0.3% in Hawaii to over 2% in New Jersey and Illinois.

How to find yours: Search "[your county] property tax rate" or check Zillow listings which often show estimated property taxes.

Homeowner's Insurance

Annual premium for homeowner's insurance. Typically $1,000-$3,000/year depending on home value, location, and coverage.

Rule of thumb: $35-50 per month per $100,000 of home value. For a $400,000 home, budget $140-200/month ($1,680-2,400/year).

HOA Fees

Monthly homeowner's association fees if applicable. Common in condos, townhomes, and planned communities. Can range from $100 to $1,000+/month.

If no HOA: Enter $0. But if you're buying a condo or in a planned community, get the exact number—HOA fees can significantly impact the math.

Maintenance Budget

Annual maintenance and repair costs. The standard rule is 1% of home value per year, though newer homes need less and older homes need more.

Recommended: Use 1% for the calculator. For a $400,000 home, that's $4,000/year or $333/month. This covers routine repairs, appliance replacement, and unexpected fixes.

Common mistake: Underestimating maintenance costs. That 1% feels high until your HVAC fails ($5,000-10,000) or you need a new roof ($8,000-15,000). Budget realistically.

Step 3: Set Your Timeline and Assumptions

These inputs determine how the calculator projects costs into the future. Your timeline is especially critical—it's often the deciding factor.

Years You'll Stay

How long you plan to live in this home. Be honest—if there's a chance you'll move in 3 years, don't enter 10.

• 1-3 years — Usually favors renting
• 4-5 years — Break-even zone
• 6+ years — Often favors buying

Home Appreciation Rate

Expected annual increase in home value. Historically, homes appreciate 3-4% nationally, but this varies by market and isn't guaranteed.

Conservative approach: Use 3% for a realistic estimate. Try 0% to see worst-case (flat market) and 5% for optimistic scenarios. Don't use recent hot-market returns (10%+) as your assumption.

Investment Return Rate

If you rent, your down payment money can be invested instead. This field sets the expected return on those investments.

Standard assumption: 7% for a diversified stock portfolio (S&P 500 historical average after inflation). Use 5% for conservative estimates.

Pro tip: Run the calculator three times with different appreciation assumptions: 0%, 3%, and 5%. This shows you how sensitive your decision is to future home price changes.

Step 4: Understanding Your Results

The calculator produces several outputs. Here's what each one means and how to use it.

Total Cost of Renting

The cumulative amount you'd spend on rent over your timeline, including rent increases and renter's insurance. This is money that doesn't build equity—but it also doesn't include maintenance headaches or property tax.

Total Cost of Buying

Everything you'd spend to own: mortgage payments, property taxes, insurance, HOA, maintenance, and closing costs (both at purchase and sale). Some of this builds equity; most doesn't.

Break-Even Point

The year when buying becomes cheaper than renting. If your break-even is year 6 but you might move in year 4, renting is likely the better choice.

Net Wealth Comparison

This is the key number. It compares your total financial position in each scenario: for buying, it's your home equity minus all costs; for renting, it's your invested down payment plus savings. Whichever is higher wins.

How to Read the Result

• If "Buying wins by $X": Over your timeline, you'd have $X more wealth by buying than renting (home equity minus the invested down payment).
• If "Renting wins by $X": You'd have $X more by renting and investing your down payment than by buying.
• If they're close (within $10-20K): The decision is financially neutral—let lifestyle preferences guide you.

Complete Example Walkthrough

Let's walk through a real example. Meet Alex, who's deciding between buying a $450,000 home or continuing to rent for $2,200/month in a mid-sized city.

Alex's Inputs

Rental Scenario:

• Monthly rent: $2,200
• Annual rent increase: 4%
• Renter's insurance: $20/month

Buying Scenario:

• Home price: $450,000
• Down payment: 15% ($67,500)
• Mortgage rate: 6.5%
• Property tax: 1.2%
• Insurance: $1,800/year
• HOA: $0
• Maintenance: 1% ($4,500/year)

Timeline & Assumptions:

• Years staying: 7
• Home appreciation: 3%
• Investment return: 7%

Alex's Results

• Total cost of renting: $209,000 over 7 years
• Total cost of buying: $284,000 over 7 years (but includes $142,000 in equity)
• Break-even point: Year 4.5
• Net wealth comparison:
  • If buying: $142,000 equity - $284,000 costs + home value = $298,000 net position
  • If renting: $67,500 down payment invested at 7% = $108,000 - $209,000 rent = $-101,000 net position

Result: Buying wins by approximately $45,000 over 7 years

What If Alex Only Stays 3 Years?

Running the same numbers with a 3-year timeline flips the result. Alex wouldn't hit break-even, closing costs wouldn't be amortized, and renting would win by approximately $15,000. This is why timeline is so critical.

5 Common Calculator Mistakes to Avoid

1. Using the wrong rental comparison

Compare apples to apples. If you're considering a 3BR house, compare it to renting a similar 3BR house—not your current studio apartment.

2. Underestimating maintenance

1% of home value feels like a lot until something breaks. Roofs, HVAC, appliances, plumbing—it adds up. Don't cheat this number down.

3. Overestimating appreciation

Just because homes in your area went up 15% last year doesn't mean they will next year. Use 3% as a reasonable long-term assumption, not recent peaks.

4. Forgetting closing costs when selling

It's not just closing costs when you buy. When you sell, you'll pay another 5-6% in agent commissions plus additional fees. Our calculator includes both.

5. Being unrealistic about timeline

Hope isn't a strategy. If there's a 40% chance you'll move in 3 years, run the calculator for 3 years—not 7. Use the timeline you're confident about.

Frequently Asked Questions

What if I'm not sure how long I'll stay?

Run the calculator for multiple timelines: 3 years, 5 years, and 7 years. See which scenario causes the decision to flip. If buying only wins at 7+ years and you might leave sooner, that's valuable information.

Should I include future renovations in maintenance?

The 1% maintenance budget covers normal upkeep and repairs. If you're planning major renovations (kitchen remodel, addition), add those separately or increase the maintenance percentage.

What about the tax benefits of homeownership?

For most buyers, especially with the higher standard deduction, mortgage interest deduction provides minimal benefit. Our calculator shows pre-tax numbers. If you itemize deductions, your effective cost of buying may be slightly lower.

How do I account for PMI?

If you're putting less than 20% down, add PMI to your monthly housing costs. Typically 0.5-1% of the loan amount annually. For a $360,000 loan, that's $150-300/month until you reach 20% equity.

What investment return should I assume?

7% is the historical average for a diversified stock portfolio after inflation. Use 5% if you're conservative. Don't use savings account rates (1-4%)—if you're renting and investing, you'd likely invest in the market, not a savings account.

Putting It All Together

The rent vs buy calculator gives you the financial clarity to make this decision with confidence. But remember: the calculator shows you the math, not the answer.

Your numbers might show that renting saves $10,000 over 5 years—but if homeownership gives you stability and satisfaction worth more than $10,000 to you, buying might still be the right choice.

Conversely, if buying comes out slightly ahead but you value flexibility and freedom from maintenance, renting might serve you better.

Use the calculator to understand the trade-offs. Then make the decision that fits your life—not just your spreadsheet.

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Ready to run your numbers? Open our Rent vs Buy Calculator and enter your real numbers. See exactly where you stand.