Rent vs Buy Calculator

Not necessarily: that is exactly what this calculator tests. Rent is the maximum you will pay for housing; a mortgage payment is the minimum (taxes, insurance, maintenance and repairs pile on top). Meanwhile the renter invests the down payment they would otherwise have locked into a house. Run the numbers above: the winner depends on your local prices, how long you stay, and investment returns.

Every dollar tied up in a down payment is a dollar not earning returns in the stock market. This calculator invests the renter's would-be down payment (plus closing costs) at your chosen investment return, and each year invests whichever path spent less. Ignoring opportunity cost is why most back-of-the-envelope comparisons unfairly favor buying.

If you itemize deductions, mortgage interest and property tax reduce your taxable income: the calculator credits you (interest + property tax) x your marginal tax rate each year. Caveat: this is a simplification. In reality you only benefit to the extent your itemized deductions exceed the standard deduction. Uncheck the itemize option to see the result with zero tax benefit.

Buying has heavy upfront friction: closing costs when you buy (here 2.5%) and agent fees when you sell (here 6%), plus early mortgage payments are mostly interest. It takes years of appreciation and principal paydown to overcome that. If you will move before the breakeven year, renting usually wins.

This is a financial comparison, not a life comparison. It does not model: rent-control or landlord risk, the forced-savings discipline of a mortgage, moving costs, tax-law changes, PMI (if your down payment is under 20%, add it to maintenance as an approximation), or the value you place on owning your home.