Rent vs Buy Calculator
Compare the true financial cost of renting versus buying over time
From the Blog
Rent vs Buy: Replacing the Slogan With Arithmetic
Built and verified by Andrius R. · Updated June 2026
"Rent is throwing money away" is the most repeated — and most incomplete — sentence in personal finance. Owning has its own thrown-away money; it's just better hidden. Two quick frameworks expose it, and then the real decision factors take over.
Framework 1: the price-to-rent ratio
A $300,000 home vs renting the equivalent for $1,500/month: ratio = 300,000 ÷ (1,500 × 12) = 16.7.
Common reading: below ~15, buying tends to win; above ~20, renting tends to win; in between — like here — the decision rests on the details below. The ratio varies enormously by city, which is the honest answer to "is buying better?": it depends on where, and the ratio is how you ask.
Framework 2: the 5% rule (owning's hidden rent)
Owners pay three costs that build no equity: property tax (~1%/year), maintenance (~1%/year), and the cost of capital (~3%/year — mortgage interest on borrowed money, lost investment returns on the down payment). Total ≈ 5% of the home's value per year, unrecoverable. On the $300,000 home: $15,000/year ÷ 12 = $1,250/month. If you can rent the same home for less than that, renting plus investing the difference is arguably ahead; for more, buying is. It's an approximation — rates, tax treatment, and your alternative returns shift the 5% — but it converts the slogan into a comparable number, which the calculator above refines with your actual figures.
What the simple math leaves out — on both sides
| Favors buying | Favors renting |
|---|---|
| Fixed-rate mortgage freezes your housing cost while rents inflate | Flexibility: career moves, relationship changes, trying a city |
| Forced savings — each payment builds some equity | No exposure to roof, boiler, or foundation surprises |
| Leverage: 10% down means price gains land on 10× your stake | The down payment can be invested in markets instead |
| Stability, control, no landlord risk | Leverage cuts both ways — price falls land on 10× your stake too |
The factor that quietly decides most cases: time
Buying carries huge fixed entry/exit costs — closing costs of 2–5% buying, agent fees and costs of ~6–10% selling. Those only amortize over years, which is why the standard guidance is that buying rarely beats renting on a horizon under ~5 years: sell early and transaction costs devour any equity gained, especially since early mortgage payments are mostly interest anyway (see the amortization schedule). If your honest answer to "will I still want to live here in five years?" is a shrug, the spreadsheet usually says rent.
How to use the calculator above honestly
Resist optimistic defaults: use realistic home appreciation (~3–4% nominal long-run, not the last boom), include maintenance and insurance, credit the renter scenario with investing the down payment and any monthly savings, and run a 5-year and a 10-year horizon. The answer flipping between horizons isn't the tool being indecisive — it is the answer: buy if you're staying, rent if you're not sure.
How the Comparison Works
This calculator computes the total cost of renting and buying over your chosen number of years — including costs that are often overlooked. Renting costs include cumulative rent (increasing each year) minus the investment growth you could earn on the deposit amount. Buying costs include mortgage payments, maintenance and transaction costs, minus the equity built through repayments and property appreciation.
The result shows which option leaves you financially better off after your chosen period — and by how much. The break-even year is the point at which buying becomes cheaper than renting on a cumulative basis.
Disclaimer: CalculatorXP calculators are for informational purposes only and do not constitute financial or property advice. House price growth, investment returns and rental increases are uncertain. Consult a qualified financial adviser before making property decisions.