fincalculatorRent vs Buy Calculator
Use this free Rent vs Buy Calculator to compare the costs of renting verses buying a home. Simple, accurate, and easy to use online.
The Rent vs Buy Calculator compares the total financial impact of renting versus buying a home over a specific time period. It goes beyond monthly payments to analyze "Unrecoverable Costs"—money you pay that you never get back.
For Renting: Unrecoverable cost is simply the rent.
For Buying: Unrecoverable costs are Mortgage Interest, Property Taxes, Maintenance, and Buying/Selling Fees, minus Home Appreciation.
When to Use This Calculator
Use this tool when deciding to renew a lease or purchase a property.
- Short vs Long Term: Buying usually has high upfront costs (Closing costs) that take years to recover through equity.
Example Scenario
Rent: $2,000/mo.
Home Price: $350,000. Rate: 6.5%.
Time: 7 Years.
You might pay $180,000 in total rent.
For buying, you might pay $140,000 in interest + $50,000 in taxes/maint.
However, if the home worth grows by $80,000 (appreciation), your net cost might be lower than renting.
Formula & Calculation Method
Formula Used
Variable Explanation
- Inputs: User provided values
- Result: Calculated output
Step-by-Step Calculation
- 1. Process user inputs.
- 2. Apply standard financial formulas specific to this calculator type.
- 3. Display result.
Interpretation Notes
Refer to specific financial literature for the exact derivation of this specific calculator.
How to Interpret the Results
Net Buy Cost: The total money "lost" to owning the home (Interest + Tax + Fees - Profit). If this is lower than Total Rent, Buying wins.
Common Mistakes
Ignoring Buying/Selling Costs: It costs ~3% to buy and ~6% to sell a home. If you move in 3 years, these fees usually make renting cheaper.