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Rent vs Buy Calculator

Compare the monthly cost of renting versus buying

How it is calculated

The tool compares one month of buying with one month of rent. The loan is price × (1 − down%). With monthly rate r = rate ÷ 100 ÷ 12 and n = years × 12 payments, the mortgage payment is loan × r × (1 + r)n ÷ ((1 + r)n − 1); at a 0% rate it is simply loan ÷ n.

To that it adds yearly ownership costs spread over 12 months: (price × tax% + price × maintenance%) ÷ 12, where both percentages are annual and based on the purchase price. The down payment must be between 0 and 100%, and the rate, rent, tax and maintenance cannot be negative; otherwise there is no result. Whichever monthly figure is lower is named the cheaper option. The comparison covers cash costs only. It ignores insurance (unless you fold it into the tax or maintenance percentage), the down payment's lost investment return, closing costs, price growth, rent increases and tax effects, so treat it as a first screen rather than a verdict.

Worked example

Price 300000, 20% down, 6.5% rate, 30 years, rent 1800, property tax 1.2% and maintenance 1% per year.

Loan: 300000 × 0.80 = 240000. Monthly rate: 0.065 ÷ 12 = 0.005417 over 360 payments gives a payment of about 1516.96. Extra costs: (3600 + 3000) ÷ 12 = 550. Buying costs $2,066.96 a month against rent of $1,800.00, so the tool says Renting is cheaper.

Try this example →

Common mistakes

  • Entering monthly property tax or maintenance in the percentage fields. Both are annual percentages of the price, such as 1.2 and 1.
  • Entering the down payment as an amount. The field is a percentage of the price, so 20 means 20%; a value above 100 gives no result.
  • Concluding that renting wins from this alone. Buying builds equity as the loan is repaid, and that is not counted in the monthly cost.
  • Leaving out insurance and fees. There is no separate insurance field, so add it into the tax or maintenance percentage if you want it included.
  • Comparing a loan term you will not keep. A 30-year payment only describes the first years if you plan to sell or refinance sooner.

Sources

About this calculator

This calculator lines up the true monthly cost of owning — mortgage principal and interest, property tax and routine maintenance (insurance is not a separate input; fold it into the tax or maintenance percentage) — against a straightforward monthly rent payment, so you can see which option costs less right now rather than guessing from a home's sticker price alone.

Rent-versus-buy math like this underpins tools used by first-time buyers, relocation counselors and financial planners, because a mortgage payment alone hides costs a landlord already bundles into rent — property tax, insurance, and maintenance that typically runs 1-2% of a home's value every year. Comparing the full monthly cost, not just the loan payment, is what actually tells you which option wins for your budget.

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Comments (1)

  • Editorial team

    This compares one month of cash outlay only. Your down payment, closing costs and home insurance are not in the buying figure, and neither is any rise or fall in the home's price or the return you could earn on the down payment elsewhere. Try running it with a few different tax and maintenance percentages to see how much they move the answer. Which cost would you add to a comparison like this first?

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