Net Cost of Buying
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How to Use This Rent vs Buy Calculator
Most rent vs buy tools only compare your monthly mortgage to your monthly rent — which hides the real decision. This calculator compares the total cost over the years you actually plan to stay, on both sides.
On the buying side it adds up your down payment, closing costs, every mortgage payment, property tax, insurance and upkeep, and the cost of selling — then subtracts the equity you walk away with, including any appreciation. On the renting side it adds up your rent (rising each year) and then subtracts what your down payment could have earned if you had invested it instead. The lower net cost wins.
Is it better to rent or buy a home?
It depends on how long you stay, the price-to-rent ratio in your area, and what else you could do with the down payment. Buying usually wins the longer you stay, because upfront and selling costs get spread over more years and you build more equity. This calculator shows the crossover for your specific numbers.
What is the 5-year rule for buying a home?
The 5-year rule says you should plan to stay at least 5 years before buying, so appreciation and equity have time to outweigh the closing and selling costs. Try setting "Years You'll Stay" to 3 versus 8 and watch the verdict flip.
Why does the down payment "opportunity cost" matter?
If you rent instead of buying, the money you would have used for a down payment can be invested. On a $400,000 home, a 20% down payment is $80,000 — invested at 6% per year, that grows meaningfully over time. Ignoring this makes buying look better than it really is, which is the mistake most simple calculators make.
What are the hidden costs of buying a home?
Beyond the mortgage, homeowners pay property taxes, insurance, HOA fees, and maintenance — often roughly 1% to 2% of the home's value per year. Buying and later selling also carries closing and agent costs, commonly around $500 to $1,500 per month equivalent once spread across a typical stay.
When does renting make more financial sense?
Renting tends to win when home prices are very high relative to rents, when you may move within 3 to 5 years, or when you can invest the down payment for a strong return. Flexibility has real financial value when your plans are uncertain.