Rent vs. Buy Calculator
Compare cumulative financial costs of renting an apartment versus purchasing a home over time.
Wealth After You Move
The comparison most people get wrong
The usual framing — rent is "dead money", buying "builds equity" — compares the wrong things. The honest comparison is total unrecoverable cost against total unrecoverable cost. For renting, that is the rent. For buying, it is mortgage interest, property tax, insurance, maintenance, and the return the deposit would have earned elsewhere. Only the principal portion of a mortgage payment actually builds equity, and in early years that is the smaller part.
Transaction costs decide most of it. Buying and selling together commonly run 8-10% of the property's value once you include stamp duty or transfer tax, legal fees, survey and agent commission. That has to be recovered from appreciation and equity before buying comes out ahead, which is why the break-even is usually measured in years rather than months. Under about five years, renting wins far more often than the conventional wisdom admits.
Maintenance is the line most calculators understate. A common planning figure is 1% of property value annually, which on a $400,000 home is $4,000 a year — lumpy, unpredictable, and entirely absent from a tenant's costs. Against all this, buying offers a fixed housing cost against rising rents and forced saving through the mortgage. The right answer depends on how long you will stay more than on any other single input.
Frequently asked questions
Is renting or buying better financially?
Buying is generally better if you plan to stay in the home for 5 to 7+ years, allowing equity appreciation to offset upfront closing costs.
Is buying always better than renting?
No. Buying wins over long horizons in markets with moderate prices relative to rents, but transaction costs of 8-10% round trip mean a short stay usually favours renting. The break-even is commonly five to seven years, and considerably longer in expensive markets.
What costs do buyers underestimate?
Property tax, insurance, maintenance at roughly 1-2% of value annually, HOA fees, closing costs on both ends, and the opportunity cost of the down payment. A mortgage payment below local rent is not the same as owning being cheaper once these are included.
What is the price-to-rent ratio?
Home price divided by annual rent for a comparable property. Below about 15 generally favours buying, above 21 generally favours renting, with the middle ambiguous. It is a quick screen rather than a decision, since it ignores rates, taxes, expected appreciation and how long you intend to stay.