Finance
Rent vs. Buy Calculator
Compare the 10-year cumulative financial costs of renting an apartment vs. buying a home.
Inputs
Renting Inputs
Buying Inputs
Results
10-Year Financial Advantage
Renting is cheaper by $0.00
10-Year Cumulative Renting Cost
$0.00
10-Year Cumulative Buying Cost
$0.00
Final Home Value (after 10y)
$0.00
Remaining Mortgage Balance
$0.00
How It Works
The Rent vs. Buy calculator compares the financial footprints of both pathways over a 10-year period. Renting costs are the sum of monthly payments adjusted for annual increases. Buying costs incorporate mortgage payments (principal and interest), property taxes, maintenance expenses, and closing fees, which are offset by the equity built up through home appreciation and principal payoff.
Formula Used
Renting Cost = ∑ [Monthly Rent × (1 + Rental Growth Rate)^t × 12] + Renters Insurance
This computes the cumulative cost of renting over time, accounting for annual rent increases. It represents the total out-of-pocket expenses that do not build equity.
Buying Cost = Mortgage Payments + Property Taxes + Maintenance + Insurance + Buying Fees − Home Equity
This calculates the net cost of homeownership, combining all recurring out-of-pocket home expenses and transaction costs, and subtracting the home equity built up through principal paydowns and property appreciation.
Worked Example
Here is a step-by-step example of how these values are calculated:
Rent
$2,000/mo (3% inc)
Home Price
$350,000
Down Payment
20% ($70,000)
Mortgage
6.5%
Tax
1.2%
Maint
1.5%
Appreciation
4%
Result: 10-Year Renting Cost: $275,126.96. 10-Year Buying Cost: $198,521.14 (Outlay of $455,420 minus $256,899 home equity). Buying is cheaper by $76,605.82.
Frequently Asked Questions
What ongoing costs are unique to buying a home?
Homeowners face unrecoverable costs not paid by renters, including property taxes, building maintenance, home insurance premiums, and mortgage interest payments, as well as upfront transaction closing costs.
How does appreciation rate impact the comparison?
Home appreciation is the primary driver of buying wealth. A higher appreciation rate boosts your final home equity, lowering the net cumulative cost of buying. If appreciation is low, renting is often financially superior.