What is the Rent vs Buy Calculator?
The Rent vs Buy Calculator runs a month-by-month comparison. The renter begins with the buyer’s down payment and buying costs as invested cash, while the homeowner builds equity through principal repayment and assumed home-price changes. Monthly housing-cost differences are also invested on the lower-cost side.
How does the Rent vs Buy Calculator work?
The buying side includes principal and interest, estimated property tax, homeowners insurance, HOA, maintenance, buying costs and an end-of-period selling cost. The renting side includes rent increases. Both sides use the investment-return assumption for cash that is not consumed by the higher housing cost.
What formula or rule does it use?
Monthly simulation compares rent with ownership costs while tracking mortgage balance, home value, selling cost and invested cash differences The dynamic “How this answer was calculated” panel substitutes the values you enter into the rule after a valid calculation.
How should you use this calculator?
Use several scenarios because future rent, home prices and investment returns are uncertain. CFPB specifically warns that rent-vs-buy calculators rely on assumptions. Use the Mortgage Calculator for the loan, Property Tax Calculator for local tax inputs, Closing Cost Calculator for upfront costs, and Down Payment Calculator for purchase cash.
How should you understand the result?
The result compares estimated ending net positions, not just monthly payments. A positive buy advantage means the simulated homeowner position is higher; a negative value means the simulated renter position is higher under the entered assumptions.
What are the limitations?
This is a simplified financial model. It does not model income taxes, mortgage insurance, rent deposits, transaction-specific tax consequences, renovations, opportunity costs outside the specified investment return, or every ownership expense. Future returns and appreciation are unknown.
Who can use this calculator?
Useful for households exploring how time horizon and assumptions can change the financial tradeoff between renting and owning.
Frequently asked questions about Rent vs Buy
Sources and methodology
Methodology, terminology and consumer guidance are grounded in the following U.S. government or housing-finance references where applicable.