Rent vs. Buy Calculator

How the Rent vs. Buy Calculator works

Use this calculator when you want to test how stay length, rent growth, home appreciation, property tax, insurance, HOA, maintenance, closing costs, selling costs, and assumed investment return move the modeled rent-versus-buy break-even point. Use Mortgage Payment for principal-and-interest only, House Affordability for income and debt limits, Down Payment for cash-to-close planning, Rent for income-based rent affordability, and lender, tax, insurance, HOA, lease, or legal sources for official figures.

The app calculates downPaymentAmount as homePrice * downPaymentPercent / 100 and loanAmount as max(homePrice - downPaymentAmount, 0). Monthly mortgage payment uses the fixed-payment formula with annualRate / 100 / 12 and loanTermYears * 12. Buying upfront cost equals downPaymentAmount plus homePrice * buyingClosingCostRate / 100. Renting upfront cost equals securityDeposit plus renterUpfrontCost. For each year from 1 through 30, the app adds buying mortgage payments, property tax grown by propertyTaxIncreaseRate, homeowners insurance and HOA grown by costInsuranceIncreaseRate, maintenance as appreciated home value * maintenanceRate / 100, selling costs, opportunity cost on buying upfront cash, then subtracts modeled sale equity and a simplified tax benefit. Renting cost adds rent grown by rentIncreaseRate, renters insurance grown by costInsuranceIncreaseRate, renter upfront cost, and opportunity cost on renter upfront cash, then subtracts the returned security deposit. Break-even is the first year where average monthly buying net cost is less than or equal to average monthly renting net cost.

Rent vs. Buy Calculator formula

This formula page covers the app's Rent vs. Buy Calculator: a 30-year comparison of modeled buying and renting costs using entered mortgage, housing-cost, rent-growth, appreciation, tax-rate, sale-equity, and opportunity-cost assumptions. It does not forecast home prices, rent markets, taxes, insurance, repairs, lender approval, or whether buying or renting is right for a specific person.

Step by step

1. Read home price, down payment percent, mortgage rate, loan term, buying closing-cost rate, property-tax rate and growth, homeowners insurance, HOA, maintenance rate, appreciation rate, cost-growth rate, selling cost, rent, rent growth, renter's insurance, security deposit, renter upfront cost, assumed investment return, and marginal tax-rate inputs.
2. Calculate down payment amount as home price times down payment percent divided by 100, then calculate loan amount as home price minus down payment amount floored at 0.
3. Convert the entered annual mortgage rate to a monthly decimal rate and convert loan term years to a monthly payment count.
4. Calculate the fixed monthly mortgage payment. If the monthly rate is 0, divide loan amount by payment count; otherwise use Loan times r divided by 1 minus (1 + r) raised to negative n.
5. Calculate buying upfront cost as down payment amount plus home price times buying closing-cost rate divided by 100.
6. Calculate renting upfront cost as security deposit plus renter upfront cost.
7. Calculate the simplified combined tax rate from marginal federal tax rate plus marginal state tax rate, capped at 100 percent and converted to a decimal. The tax filing status input is captured for scenario compatibility and validation coverage but does not change the formula today.
8. For each stay length from 1 to 30 years, add buying recurring costs: mortgage payments while the loan is active, property tax grown by the property-tax growth rate, homeowners insurance and HOA grown by the cost-growth rate, and maintenance based on the current modeled home value.
9. For the same stay length, add renting recurring costs: annual rent grown by the rent-growth rate plus renter's insurance grown by the cost-growth rate.
10. For each year, add mortgage interest and property tax, then multiply by the simplified combined tax rate to estimate the model's tax-benefit line. This shortcut does not model itemization, standard deduction, SALT limits, mortgage-interest limits, AMT, phaseouts, or filing-status thresholds.
11. At the selected sale year, calculate home value from home price grown by appreciation for Y years, calculate remaining loan balance from the amortization schedule, calculate sale equity as home value minus remaining balance, and calculate selling cost as home value times selling closing-cost rate.
12. Calculate opportunity cost on buying upfront cost and renting upfront cost using the entered average investment return over the selected stay length.
13. Calculate buying net cost as buying upfront cost plus buying recurring costs plus selling cost minus sale equity minus simplified tax benefit plus buying opportunity cost.
14. Calculate renting net cost as renting upfront cost plus renting recurring costs minus returned security deposit plus renting opportunity cost.
15. Divide each net cost by years times 12 to produce average monthly buying and renting cost rows for year 1, 5, 10, and 30.
16. Find the first year where buying average monthly cost is less than or equal to renting average monthly cost. If no such year exists in the 30-year range, the app reports no break-even.
17. Use CFPB mortgage-payment, Loan Estimate, Closing Disclosure, Regulation Z, IRS, lender, local tax, insurance, HOA, lease, legal, or local regulator sources before adding official mortgage, tax, insurance, lease, rent-control, approval, or jurisdiction-specific claims.

Worked example

Default and later break-even fixtures

These examples use the app's package fixtures so the formula page matches the production calculator instead of a generic rent-versus-buy worksheet.

1. Default fixture: $400,000 home price, 20 percent down, 6.5 percent annual mortgage rate, 30-year term, 3 percent buying closing costs, 1.2 percent property tax, $1,500 yearly insurance, $1,200 yearly HOA, 1 percent maintenance, 3 percent appreciation, 6 percent selling costs, $2,400 monthly rent, 3 percent rent growth, $25 monthly renter's insurance, $2,400 security deposit, $500 renter upfront cost, 5 percent investment return, and 22 percent federal plus 5 percent state marginal tax-rate inputs.
2. The default fixture calculates an $80,000 down payment, a $320,000 loan amount, a $2,022.62 monthly mortgage payment, $92,000 buying upfront cost, and $2,900 renting upfront cost.
3. For a 1-year stay, the average monthly buying cost is $4,552.59 and the average monthly renting cost is $2,478.75.
4. For a 5-year stay, the average monthly buying cost is $2,145.32 and the average monthly renting cost is $2,596.09.
5. For a 10-year stay, the average monthly buying cost is $1,832.93 and the average monthly renting cost is $2,798.07.
6. For a 30-year stay, the average monthly buying cost is $1,513.61 and the average monthly renting cost is $3,867.99, making the year-30 renting-minus-buying difference $2,354.38.
7. The first fixture's break-even year is 4 years because that is the first modeled stay length where buying average monthly cost is less than or equal to renting average monthly cost.
8. Sensitivity fixture: $600,000 home price, 10 percent down, 7 percent annual mortgage rate, $2,600 monthly rent, 2 percent appreciation, 6 percent assumed investment return, and 24 percent federal plus 6 percent state marginal tax-rate inputs produce a $540,000 loan, $3,592.63 monthly mortgage payment, $78,000 buying upfront cost, and $3,350 renting upfront cost.
9. That later-break-even fixture reports $7,515.70 year-1 buying cost versus $2,714.25 year-1 renting cost, $3,941.30 year-5 buying cost versus $2,856.66 year-5 renting cost, and a 15-year break-even.
10. The tax filing status differs between the two fixtures, but the current formula uses the marginal tax-rate inputs directly and does not branch on filing status.

The examples show how sensitive the result is to entered stay length, appreciation, rent growth, tax-rate, sale-cost, and opportunity-cost assumptions. They do not show whether buying or renting is personally suitable.

Assumptions and what this calculator ignores

Geographic scope: works globally. The math is currency-agnostic, so enter amounts in your own currency; local taxes, fees, and product rules are not included.

• The calculator compares average monthly net cost at 1, 5, 10, and 30 years. Buying costs can fall in later rows because the model subtracts sale equity after appreciation and remaining loan balance. That does not make appreciation, sale price, or transaction timing certain.
• The tax fields are a simplified sensitivity input, not a tax return. The app adds marginal federal and state tax rates, caps the combined rate at 100 percent, and applies it to modeled mortgage interest plus property tax. The taxFilingStatus field is captured for scenario compatibility and validation coverage, but it does not change the formula today. The app does not model itemizing versus the standard deduction, SALT limits, mortgage-interest debt limits, AMT, filing-status thresholds, phaseouts, local rules, points, capital gains, or real tax forms.
• The estimate excludes PMI, escrow administration, lender underwriting, credit pricing, prepayment penalties, rent control, lease break fees, moving costs, furniture, utilities, repairs beyond the maintenance-rate assumption, special assessments, local transfer taxes, title fees beyond the entered closing-cost rates, and product-specific or jurisdiction-specific rules. Package fixtures cover a four-year break-even case and a later 15-year break-even case, and internal independent comparator checks may be used only as validation evidence. CFPB mortgage payment materials are needed before copy explains principal-and-interest versus total monthly payment, escrow, tax, insurance, PMI, or HOA boundaries. CFPB Loan Estimate, Closing Disclosure, and Regulation Z section 1026.37 materials are needed before copy discusses official mortgage offers, projected payments, closing costs, or disclosure forms. IRS Publication 530, Publication 936, and Publication 523 are needed before homeowner deduction, mortgage-interest, property-tax, itemization, points, sale-of-home, or capital-gain tax claims. Results are educational estimates, not financial, tax, legal, lending, mortgage, investment, real-estate, or personalised advice.

What this formula does not include

• The result is an educational scenario comparison, not a homebuying recommendation, rent recommendation, lender quote, affordability decision, tax answer, legal answer, insurance estimate, investment forecast, property-price forecast, or personalised financial advice.
• Average monthly net cost is not the same as a monthly cash bill. It includes modeled sale equity, selling costs, returned deposit, simplified tax benefit, and opportunity cost spread across the selected stay length.
• The tax-benefit line is a simplified rate shortcut. It does not model itemization, standard deduction, SALT caps, mortgage-interest limits, points, AMT, phaseouts, filing-status thresholds, state rules, capital-gain exclusion, tax forms, or actual tax liability.
• The taxFilingStatus input is stored for scenario compatibility and validation coverage, but it does not change the current formula.
• The model assumes one fixed mortgage rate and regular monthly payments. It does not model adjustable rates, buydowns, rate locks, lender credits, PMI, escrow analysis, refinancing, prepayment, late payments, forbearance, underwriting, or approval.
• Property tax, homeowners insurance, HOA, maintenance, appreciation, selling costs, rent growth, renter's insurance, security deposit, and investment return are entered assumptions. The app does not pull live rates, home prices, rent listings, insurer quotes, tax assessments, lease terms, or market returns.
• Repairs, renovations, utilities, moving costs, lease-break fees, rent control, special assessments, transfer taxes, title fees, inspection costs, appraisal fees, transaction timing, local legal rules, and product-specific mortgage terms are not modeled unless represented by the entered assumptions.
• Sale equity can make long-horizon buying averages look lower, but equity is not guaranteed cash available at a known date. Actual sale proceeds depend on market value, selling costs, remaining debt, timing, taxes, and transaction details.
• Opportunity cost uses the entered average investment return as a simple growth assumption. It is not a forecast of investment performance and does not model taxes, fees, volatility, sequence of returns, or account constraints.
• Use official or primary sources before adding rule-specific mortgage, tax, insurance, HOA, lease, rent-control, legal, local-market, or jurisdiction-specific claims.

Common mistakes to avoid

• Comparing rent only with the mortgage principal-and-interest payment. The buying side also includes closing costs, property tax, homeowners insurance, HOA, maintenance, selling costs, equity, tax-rate assumptions, and opportunity cost.
• Treating appreciation, rent growth, investment return, property tax, or insurance growth as forecasts. They are user-entered assumptions for a scenario, not live market predictions.
• Reading break-even as a buy or rent recommendation, or assuming tax filing status changes the result. The break-even year only says when this model's average monthly buying cost first falls below modeled renting cost under the entered assumptions, and the marginal tax-rate fields affect the simplified tax benefit while filing status is recorded but not used in the calculation.

Key terms

Break-even year

The first year where modeled average monthly buying cost is less than or equal to modeled average monthly renting cost. It depends on the entered assumptions and does not decide whether buying or renting is personally right.

Average monthly net cost

The app's total modeled net cost for a stay length divided by the number of months in that stay length. For buying, this includes upfront cash, recurring costs, selling cost, equity, tax-rate assumptions, and opportunity cost.

Opportunity cost

The modeled return that upfront cash could have earned elsewhere at the entered average investment return. The calculator applies it to buying upfront cash and renter upfront cash; it is a scenario assumption, not an investment forecast.

Frequently asked questions

Methodology, sources, and disclaimer

This calculator is an original implementation based on the app's documented rent-versus-buy formulas, app-specific assumptions, deterministic fixtures, edge cases, rounding policy tests, and internal validation. It is not copied from a single source.

Outputs are checked with deterministic fixtures, edge cases, rounding policy tests, and internal validation artifacts. The result remains an educational estimate, not a homebuying recommendation, rent recommendation, lender quote, approval, tax answer, legal answer, insurance estimate, investment forecast, or personalised advice.

Formula version 2026.05.22-generic-rent-vs-buy. The version marks the calculation logic and validation fixture set used for this estimate.

• CFPB mortgage payment materials should be used before copy discusses principal-and-interest versus total monthly payment, escrow, property tax, homeowners insurance, mortgage insurance, HOA dues, or affordability boundaries.
• CFPB Loan Estimate, Closing Disclosure, and Regulation Z section 1026.37 materials should be used before copy discusses official mortgage offers, projected payments, closing costs, cash to close, lender forms, or disclosure requirements.
• IRS Publication 530, Publication 936, and Publication 523 should be used before copy discusses homeowner deductions, real-estate taxes, mortgage-interest deduction, itemization, points, sale-of-home exclusion, capital gains, or other tax treatment.
• Local tax authorities, insurers, HOA or co-op documents, lease documents, lender disclosures, legal sources, real-estate professionals, and local regulators should be used before copy makes jurisdiction-specific, product-specific, rent-control, transfer-tax, repair, special-assessment, insurance, approval, tax, or legal claims.

Results are educational estimates, not advice. Read the full disclaimer.

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