Rent vs. Buy Calculator
Compare the real cost of renting or buying over a given time horizon — interest, HOA fees, and maintenance on the buying side, weighed against expected price appreciation.
How to use the calculator
- Enter the purchase price, down payment, mortgage rate, and loan term.
- Enter HOA fees, expected maintenance, and expected annual price growth.
- Enter the comparable rent and how many years ahead you want to compare.
How it's calculated
Worked example: rent of $15,000 a month is 15,000 × 12 × 10 = $1,800,000 over ten years. Owning the equivalent home costs $794,743 net over the same period, or $1,005,257 less. The reason the ownership cost looks so low is that principal payments are not an expense but savings: by the end you hold $3,010,082 in home equity. Interest, fees and maintenance are the real outgoings.
The model compares the pure cash costs of owning (the interest portion of your mortgage payments, HOA fees, and maintenance) minus home price appreciation, against total rent over the same period. Paying down the loan principal isn't counted as a cost — it's savings, shown separately as "home equity at the end" (home value minus remaining loan balance).
The cost of tying up your equity
Comparing renting with owning is not only about rent versus interest and repayments. The equity you put into a property could have been invested elsewhere and earned a return. This opportunity cost is invisible in an ordinary monthly budget, but it is real: money sitting in the property cannot simultaneously sit in the bank or in the market.
Running the other way are costs of ownership that do not exist when renting at all. Maintenance, service charges, insurance, property tax where it applies, and the transaction costs of both buying and later selling — none of that builds equity. The arithmetic therefore depends heavily on how long you actually stay: purchase costs are spread over the years of ownership, and become heavy to carry over a short period.
Frequently asked questions
Why doesn't loan principal count as a cost?
Principal payments move money from your bank account into home equity — you don't get poorer, you swap one form of wealth for another. Only the interest portion of the payment is a real expense.
Why is the result so sensitive to price growth?
Because home price appreciation is subtracted directly from the cost of owning. Even small changes in the assumed annual growth rate compound into large swings over a decade.
Should I always pick the cheaper option?
Not necessarily — housing security, flexibility to move, and personal risk tolerance for the housing market also matter. This is an economic comparison tool, not a complete recommendation.