Rent vs Buy Calculator
See how a fixed-rate mortgage payment stacks up against monthly rent for the same housing choice. A first-pass cash-flow check — not a full wealth model.
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Result
The formula
We estimate a 30-year amortizing mortgage on the loan after your down payment, then compare that monthly principal & interest to the rent you enter. Difference = mortgage − rent.
Worked example
- Home $350,000; 20% down; 6% rate; rent $1,500
- Loan = $350,000 × 0.80 = $280,000; r = 0.06/12; n = 360
- Mortgage P&I ≈ $1,678.74 vs rent $1,500 → buying costs ≈ $178.74 more/mo
Result: ≈ $1,678.74 mortgage vs $1,500 rent
How rent vs buy is compared here
This page compares two monthly cash outflows: your rent versus a simplified mortgage payment. It deliberately omits many ownership costs and benefits so the mortgage math stays transparent.
Mortgage side
Down payment % reduces the loan balance. We assume a 30-year fixed amortizing loan (360 months) at the annual rate you enter, with level monthly principal & interest — the same formula as the mortgage calculator.
If the rate is 0%, payment is loan ÷ 360. Property tax, insurance, HOA, maintenance, and PMI are not added.
Rent side
Rent is the monthly amount you type — no utilities, parking, or renter’s insurance unless you bake them into that number.
What a full analysis would add
Buying builds equity and may appreciate (or not); closing costs and selling costs matter on short stays. Renting preserves mobility and avoids repair risk. Price-to-rent rules of thumb (~15–20) are rough screens only.
Opportunity cost of the down payment (forgone investment returns) can flip a close comparison. This tool does not capitalize those effects.
What we do not model
No tax deductions, capital gains, inflation of rent, ARM resets, or extra principal payments. Use the mortgage and compound-interest tools for deeper scenarios.
Interesting facts
Price-to-rent rule of thumb
A price-to-rent ratio above ~20 often favors renting; below ~15 often favors buying — local appreciation, rates, and taxes can flip the answer.
Hidden ownership costs
Maintenance, HOA fees, insurance, and property tax routinely add 1–3%+ of home value per year beyond the mortgage payment.
Opportunity cost of down payment
Cash locked in a down payment could otherwise earn returns elsewhere. Include that forgone yield in a fair comparison.
Mobility premium
Renting is often cheaper when you may move in a few years — buying spreads closing costs over a short stay and can lose money.
Break-even horizon
Many households need several years of ownership before transaction costs and equity build outweigh renting — run the years explicitly.
Frequently asked questions
No. The buy side is principal & interest only on a 30-year loan after your down payment. Add tax, insurance, HOA, and maintenance separately for a realistic ownership budget.
Buying builds equity over time; renting does not. This calculator compares monthly cash outflow only — it does not credit principal paydown or home-price changes.
Thirty-year fixed loans are a common U.S. baseline for comparison. For other terms, compute the payment on the mortgage calculator and compare manually to rent.
Not necessarily — part of each payment builds equity. Still, if you may move soon, high upfront costs can erase that advantage.
Enter the percent down you would actually pay. Remember that cash used for down payment is money that could otherwise stay invested while you rent.
References
- Owning a home — consumer guide Step-by-step mortgage and home-buying education from the CFPB.
- Mortgage shopping tools How to compare loan offers beyond the sticker rate.
- Housing affordability context Federal housing programs and rental-assistance context.