Rent vs Buy Calculator

Make a data-driven housing decision with this free Rent vs. Buy net wealth simulator. Deciding whether to buy a home or rent is rarely as simple as comparing a monthly mortgage payment to rent. Homeowners face unrecoverable costs—such as property taxes, maintenance, homeowner association fees, and mortgage interest—while renters can invest their upfront down payment and monthly savings into the market. This calculator is built around the 5% Rule of Real Estate Economics:

Cost of Equity & Capital: Compares mortgage amortization and home appreciation against long-term compound stock portfolio returns.
Unrecoverable Housing Costs: Accounts for property taxes (~1%), maintenance (~1%), insurance, and mortgage interest vs. pure rental outflow.
Breakeven Horizon: Pinpoints the exact year when home equity surpasses the compounding wealth of renting and investing the difference.

🏠 Rent vs. Buy Calculator

Compare long-term net wealth between buying a home and renting while investing the difference

🌎 Currency:

Home Purchase Details

Home Price

Down Payment (%)

Mortgage Rate (APR)

p.a.

Loan Term

Time Horizon (Stay)

years

Rental Alternative Details

Initial Monthly Rent

Annual Rent Inflation

p.a.

Investment Return (Rent)

p.a.

⚙️ Additional Home Expenses & Trends

Property Tax Rate

p.a.

Home Maintenance

p.a.

Home Appreciation

p.a.

Selling Costs (Future)

fee

Financial Advantage

Net Wealth (Buying)

Equity minus selling costs

Net Wealth (Renting)

Investment portfolio

Break-Even Horizon

When buying wins

Total Home Value

At end of horizon

Net Wealth Trajectory Over Time

Hover over graph to see details

Buying Net Wealth

Renting Net Wealth

Horizon Summary

Expand months

Year	Home Value	Mortgage Balance	Buying Wealth	Renting Wealth

💡 Key Financial Insights

⚠️ Disclaimer: Educational projection only. Assumes constant rates of return, home appreciation, and rent inflation. Actual market conditions will vary.

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HOW TO USE THIS FREE RENT VS. BUY CALCULATOR

1. Select your preferred currency from our list of 25+ supported global currencies.

2. Input Home Purchase Details: Enter the target purchase price, down payment percentage, expected mortgage APR, loan term, and total time horizon (in years).

3. Input Rental Alternative Details: Enter the initial monthly rent for an equivalent property, expected annual rent inflation, and your expected annual return from investing the difference.

4. Set Additional Ownership Trends: Input your local property tax rate, estimated annual home maintenance cost, expected annual home appreciation, and future selling fees.

5. Inspect the Net Wealth Trajectory Chart: The interactive graph displays the year-by-year net wealth trajectory of Buying (equity minus selling costs) versus Renting (compounding investment portfolio).

6. Identify Your Breakeven Horizon: Locate the exact milestone year where the financial advantage flips from renting to buying.

7. Export or Copy Your Analysis: Use the Copy Summary button or click Export to PDF / CSV to save a complete amortization and investment schedule for your housing plan.

Key Takeaways

1. True Opportunity Cost Modeling: Accounts for the hidden investment growth of investing a 20% down payment in low-cost index funds versus locking it into illiquid home equity.

2. Dynamic Breakeven Year Detection: Calculates the exact inflection point where long-term property appreciation offsets upfront transaction and closing costs.

3. Unrecoverable Expense Factoring: Incorporates property taxes, maintenance reserves, loan interest, and future realtor selling fees into every calculation.

4. Instant Export Options: Download the full year-by-year horizon summary table as a PDF or CSV spreadsheet for mortgage planning.

5. Zero Data Tracking: Your financial inputs, home budgets, and investment assumptions run entirely in client-side memory without saving data to external servers.

Frequently Asked Questions

1. What is the “5% Rule” in the Rent vs. Buy decision?

Ans: The 5% Rule is a real estate rule of thumb used to estimate a homeowner’s annual unrecoverable costs. It breaks down into three components: 1% for property taxes, 1% for home maintenance and repairs, and 3% for the cost of capital/interest. If equivalent annual rent is less than 5% of the home’s total purchase price, renting and investing the excess cash flow is often mathematically advantageous over shorter horizons.

2. How does renting and investing the difference build wealth compared to home equity?

Ans: When you rent, you avoid paying a large upfront cash down payment, closing fees, property taxes, and home maintenance. If you take that saved down payment and any monthly cash savings and invest them in diversified stock index funds (which historically have appreciated faster than residential real estate), compound market growth can often outpace the net equity built from a mortgage.

3. What are “unrecoverable costs” for homeowners versus renters?

Ans: For a renter, the monthly rent check is the sole unrecoverable cost. For a homeowner, unrecoverable costs include mortgage interest, property taxes, homeowners insurance, HOA dues, routine maintenance/repairs, and real estate broker commissions when selling. Only the principal portion of a mortgage payment contributes toward building net wealth.

Rent vs Buy Calculator