Key takeaways
- Equity and appreciation offset the cost of buying.
- The down payment has an opportunity cost.
- Short stays favour renting because of up-front costs.
How the rent vs buy calculator works
Renting's cost is simply the rent you pay. Buying's net cost is everything you pay out, plus the return your down payment would have earned invested, minus the equity you own when you leave. We ignore tax deductions and selling costs for simplicity.
Formula
Standard formula. Further reading: CFPB – Buying a house
Worked example
With $2,000/month rent and no increases, one year of renting costs $24,000. Buying at 0% interest with no other costs would have a net cost of zero, because every payment becomes equity.
Change any number above and the plain-English explanation updates instantly with your own figures.
Frequently asked questions
How long do I need to stay for buying to make sense?
Often 5+ years, because equity builds slowly at first and buying has large up-front costs.
Does this include closing and selling costs?
No. Closing (2–5%) and selling costs (often 5–6%) make buying less attractive over short horizons.
What is opportunity cost?
The return your down payment could have earned if invested instead of tied up in the house.
Is renting throwing money away?
No — rent buys housing and flexibility. Mortgage interest, taxes and maintenance are also unrecoverable costs.
Embed this calculator
Add this free calculator to your website or blog. Copy the code below:
Need a branded, white-label version for your business? Contact us.
Results are estimates for educational purposes and are not financial advice.