Rent vs Buy Calculator

The rate on the loan, as an annual percentage. Held constant for the whole period.

Annual property tax as a share of the home's value. It scales with the value as the home appreciates, which is why it is a rate rather than a dollar amount. Rates vary by county, not just by state.

What you spend keeping the home up, as a share of its value each year. One percent is the usual rule of thumb and is optimistic for an older house. This is the cost renters do not carry and owners routinely forget.

What the comparable rental costs today. Comparable matters: a rental you would actually accept, not the cheapest listing you can find.

What it costs to sell, as a share of the sale price: agent commission, transfer taxes, repairs asked for at inspection. Five or six percent is usual, and omitting it is the second most common way a calculator flatters buying.

How long before you sell or move. The answer is more sensitive to this than to anything else, because selling costs are paid once and are spread over however long you stayed.

What the home costs. Tax and maintenance are computed against the home's value as it changes, so this figure drives more than the loan.

The same, for the return on money not tied up in the house. Eight percent is in the range of a diversified equity portfolio and is far larger than the appreciation uncertainty, which is most of the reason the answer is a range at all: the renter's side of this comparison is the volatile one. Zero means certain.

Homeowner insurance for a year, as a dollar amount. Held flat rather than scaled, because premiums track rebuild cost rather than market value.

How fast rent rises each year. Applied once a year on the anniversary rather than smoothly, because that is how a lease renewal works.

How fast the home gains value. Applied continuously through the year. Over a long run this has tracked inflation more closely than most people expect, so a large number here should be a deliberate assumption, not a default.

Optional. Association or condo dues for a year. Leave blank if there are none. They do not build equity and they rise, so on a condo they can decide the comparison on their own.

What money you do not tie up in the house would earn each year. It applies to the down payment and to every month's difference in cost, whichever side is cheaper that month. Setting it to zero answers a different question: what if the money simply sat there.

How long the mortgage runs. It does not have to match how long you stay; the model sells the home and repays whatever is left.

How unsure you are about the home's yearly gain, as one standard deviation. This is as much a part of the answer as the gain itself, which is why it is asked for rather than assumed. The model runs the whole comparison across eleven appreciation levels and eleven return levels and reports how often buying wins. Quote it per YEAR: it is scaled to your holding period by the square root of time, because the model applies one constant rate across the period and a long-run average is less uncertain than a single year. Three percent is a reasonable starting point for a residential market. Set it to zero to say you are certain, and the grid collapses along that axis.

Cash you put in. It is the single most important input here, because if you rent it stays invested instead, and that is the comparison most calculators leave out.

What the sale actually puts in your pocket: the value, less the costs of selling, less the loan.

The values across the top of the grid: what the money you do not tie up earns each year. Read a column to hold this fixed. The middle entry is your own figure.

Machinery, and NOT an input. The same for the column axis: Excel substitutes into it while filling the grid, and the rest of the time it mirrors Investment_Return.

Money the OWNER invested, in any month where rent cost more than owning. Usually zero, and worth watching when rent is high: a model that credits only the renter is quietly assuming this money went nowhere.

The share of the simulated futures in which buying leaves you better off. Blank until you enter both uncertainties. Read it as a shape rather than a forecast: it is the chance under YOUR assumptions about how uncertain those two numbers are, and it says nothing about whether those assumptions are right.

The down payment, invested, plus every month's saved cost, invested, compounded to the same date. This is what renting leaves you with, and it is the figure most calculators never compute.

The body of the grid: the advantage of buying, recomputed for every combination of the two axes. One hundred and twenty-one cells, each one the whole calculation run again. It is a component of the table rather than a result on its own.

Cash out of pocket while owning, including the down payment. Not a measure of who is better off, because some of it came back as equity; shown so the cash-flow story is visible next to the wealth story.

Cash out of pocket while renting over the same period.

Machinery. Excel requires the formula being tabulated to sit in the grid's top-left corner, where it means nothing to a reader, so it is formatted away. It holds Advantage_Of_Buying.

The values down the left of the grid: how much the home gains each year. Read a row to hold this fixed and vary the other axis. The middle entry is your own figure.

Machinery, and NOT an input. Excel substitutes each value from the row axis into this cell while it fills the grid; the rest of the time it mirrors Annual_Appreciation. Change Annual_Appreciation above, never this: the axis is derived from it, so editing the mirror moves the axis while the table walks and the grid comes out meaningless.

The advantage in a lucky tenth. The gap between this and the unlucky tenth is the honest width of the answer, and on most inputs it is wide enough to be the finding.

The first month from which buying is ahead and stays ahead for the rest of the table. Not the first month it merely edges in front: a crossing that later reverses is not a break-even, and this figure is built backward from the last month so one cannot be reported as one. Zero means buying never overtakes renting within the period the table covers.

The same figure in years, for reading against how long you actually expect to stay. Blank when buying never overtakes.

The two differenced. Positive means buying comes out ahead over this period on these assumptions. It is often a smaller number than people expect, and it can change sign on a one-point change in any of the three forecasts.

The advantage of buying in an unlucky tenth of the simulated futures: weak appreciation, strong investment returns, or both. If this is comfortably negative, buying carries real downside on your own assumptions.

The middle of the simulated futures. It sits near the single-point answer rather than on top of it, because the comparison is not symmetric in the two forecasts.

Reads OK, or explains why the inputs are not valid or why the answer deserves a second look.

Principal and interest only. Tax, insurance, maintenance and dues are added separately in the monthly table.

Everything owning costs in the first month. Compare it against the rent to see how far apart the two choices start.

The sale proceeds plus that side account. This is what buying leaves you with at the end of the period.

What the home is worth on the day you sell, at the appreciation you assumed.

What is still owed then, from the closed-form balance rather than an accumulated schedule.