Home

Rent vs. Buy

Compares your wealth after renting and investing the difference against buying the home, including closing costs, upkeep, appreciation and selling fees.

How rent vs. buy is compared

Buying costs more than the mortgage payment. You also pay closing costs, property tax, insurance and upkeep, and about 6% in fees when you sell. Renting costs only rent, but rent rises each year and you build no equity.

To compare fairly, the calculator assumes the renter invests the down payment and closing costs. Each month, whoever has the cheaper housing invests the difference. At the end, the buyer's wealth is home value minus selling costs and the remaining loan, plus their savings. The renter's wealth is their portfolio.

What decides it

Time. Buying and selling costs take years to earn back. Stays under five years usually favor renting.
Price-to-rent ratio. When homes cost more than about 20 years of rent, renting often wins.
Appreciation vs. investment return. Small changes here move the result a lot, so try a few.

Common questions

How long do I need to stay for buying to beat renting?

It depends mostly on rent compared with home prices. In our example of a $350,000 home against $1,950 rent, buying pulls ahead in year 8. Stays under five years usually favor renting because buying and selling costs take years to earn back.

Does this include the down payment I could invest instead?

Yes. The calculator assumes the renter invests the down payment and closing costs, and each month whoever has the cheaper housing invests the difference.

What is the price-to-rent ratio?

Home price divided by a year of rent. When a home costs more than about 20 years of rent, renting and investing the difference often wins.