mtgcalculator

Rent vs buy calculator

A proper NPV (net present value) comparison: every dollar in and out, on both sides, discounted to today. Far more honest than “monthly mortgage vs monthly rent” comparisons that ignore the down payment and selling costs.

Rent vs buy calculator

Compares the present value of every dollar you'd spend renting vs. owning, over your planned holding period. Includes appreciation, opportunity cost of the down payment, taxes, insurance, maintenance, HOA, and selling costs.

Comparison setup

How long you’ll compare the two options, and the rate we use to discount future dollars to today’s value.

Return you expect on cash you’d otherwise invest (also discounts future rent & payments).

If you rent

Comparable lease to the home you’d buy — not a cheaper apartment.

How much you expect rent to rise each year.

If you buy

Mortgage, carrying costs, price growth, and what you get back when you sell.

For mortgage interest deduction; use 0 if you take the standard deduction.

Agent + transfer taxes; often ~6–8% of sale price.

Net cost of buying (PV)

$154,550

All cash out, minus net sale proceeds, discounted to today.

Net cost of renting (PV)

$180,985

All rent payments, discounted to today.

Verdict over your horizon

Buying wins

Difference: $26,434 · break-even at year 4

Home value at sale: $491,950 · Mortgage balance at sale: $289,332 · Net sale proceeds: $168,181

Frequently asked questions

How long do I need to stay in a home for buying to beat renting?
In most US markets the rough rule of thumb is 5–7 years. The exact number depends on your local price-to-rent ratio, your mortgage rate, expected appreciation, and the opportunity cost of your down payment. The calculator above shows the precise break-even year for your inputs.
Why does the calculator subtract sale proceeds from the cost of buying?
Owning a home is partly an investment. When you sell, you get back the equity you have built, less the mortgage balance and selling costs (typically 6–8% of price for agent commissions and transfer taxes). Subtracting net sale proceeds gives you the true net cost of owning over the holding period.
What discount rate should I use?
Use the after-tax return you would realistically earn on the cash you would otherwise put down. For long horizons, 5–7% (a diversified stock portfolio) is reasonable. Lower if your alternative is a savings account; higher if it is a small-business investment.
Does the calculator include the mortgage interest deduction?
Yes — but only up to the marginal tax rate you enter. Note that since the 2017 Tax Cuts and Jobs Act roughly doubled the standard deduction, most US households no longer itemize and therefore get no benefit. Set the marginal rate to 0 if you take the standard deduction.
What about emotional and lifestyle factors?
The calculator only handles dollars. Stability, the freedom to renovate, neighborhood ties, and risk tolerance all matter. Treat the financial answer as one input to a bigger decision.