Rent vs Buy Calculator

Find out whether renting or buying a home leaves you better off.

Result

Better choice

After 10 years

years

Buying

% of price
% a year
% a year
% of price
% of price
% a year

Renting

% a year
% a year

Your wealth: buying vs renting

Year by year

How to use the rent vs buy calculator

  1. Enter how many years you expect to stay – the single biggest factor.
  2. For buying, enter the price, down payment, mortgage rate and term, the yearly tax, insurance and upkeep as a percentage of the home’s value, the one-off buying and selling costs, and how fast you expect home prices to grow.
  3. For renting, enter the rent, how fast it rises, and what you could earn (investment return) by investing money you don’t spend on a home.

How the comparison works

  • Both start with the same cash. The buyer spends it on the down payment and buying costs; the renter invests it.
  • Every month, whichever option is cheaper invests the difference.
  • At the end, the buyer’s wealth is the home’s value, less selling costs and the remaining loan, plus their investments. The renter’s wealth is their investments.

When buying tends to win

  • You stay long enough – usually 5 years or more – to spread out buying and selling costs.
  • Rents are high compared to prices (a low price-to-rent ratio), or rents rise fast.
  • Home prices grow faster than, or close to, what your investments would earn.

Renting tends to win when you may move soon, prices are high compared to rents, or mortgage rates are high. Work out the payment with the mortgage calculator, and UK buyers can add the stamp duty to buying costs.

Frequently asked questions

Is it better to rent or buy?

It depends on how long you stay, the price compared to the rent, mortgage rates and what you could earn by investing instead. Buying usually wins only if you stay at least 5 years.

What is the price-to-rent ratio?

The home price divided by a year’s rent. Under about 15 tends to favour buying; over about 20 tends to favour renting.

What costs of owning are easy to forget?

Property tax, insurance, maintenance (often 1% of the value a year), buying costs such as stamp duty and legal fees, and selling costs such as agent fees.

Does the calculator include tax breaks?

No. Mortgage interest deductions and tax on investment gains depend on your country and situation – include them by adjusting the rates if they apply to you.