Rent vs. Buy Calculator

The full picture: appreciation, opportunity cost, and transaction costs on both sides.

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Assumes 3% home appreciation, 3% rent inflation, a 6% return on invested cash, 3% closing costs and 7% selling costs.

Renting saves you
$16,268.48
Net cost of buying
$170,683.47
Net cost of renting
$154,415.00

"Net cost" nets out what you'd walk away with either way — home equity if you buy, or invested savings if you rent and invest the difference instead.

A worked example

A $400,000 home with 20% down at 6.5%, compared against $2,200/month rent over 7 years, comes out with renting about $16,268 cheaper net of all costs — largely because closing and selling costs are still being absorbed over a relatively short hold.

Frequently asked questions

Why does the answer change so much with the time horizon?

Buying carries large upfront transaction costs (closing costs) and back-end costs (selling costs) that get spread over however long you hold the home — the longer you stay, the smaller those one-time costs look relative to the total, which is why buying usually looks better the longer the horizon.

What does 'opportunity cost' mean here for renting?

If you rent, the money that would have gone toward a down payment and closing costs can instead be invested — this calculator assumes it grows at your chosen investment return rate, and credits that growth back to the renting side of the comparison.

Does this account for the mortgage interest tax deduction?

No — this keeps things simpler by comparing pre-tax cash flows on both sides. The deduction's actual value depends heavily on whether you itemize and your specific tax situation, which varies too much to generalize.

This calculator provides estimates for general informational purposes only and is not financial advice. Real appreciation, rent growth, and investment returns are never guaranteed.