Formula
Rent total sums monthly rent with annual increases. Buy total = down payment + (mortgage payment + taxes/insurance + maintenance) × comparison months. Cash gap = buy total − rent total.
Rent vs Buy Calculator
Rent vs Buy Calculator compares multi-year renting cash outflow with buying cash outflow before resale value, appreciation or equity effects.
Worked example
At 1,800 monthly rent with 3% annual increases, the rent total over 5 years is compared with an 80,000 down payment plus mortgage and ownership costs for a 500,000 home.
Professional note
This first-pass comparison deliberately shows cash pressure before equity. A later deeper model can add resale, appreciation, tax and investment assumptions.
Regional and unit assumptions
Standard or basis: transparent fixed-rate amortising loan arithmetic with monthly payments. The page does not claim APR disclosure compliance, tax treatment, lender approval, affordability assessment or local mortgage-product rules.
Assumptions and limitations
- The result compares cash outflow before resale value, equity, appreciation, selling costs, tax effects or investment returns on the down payment.
- Mortgage payments use a fixed-rate monthly amortisation formula.
- Ownership costs are simple monthly estimates.
- Rent increases are applied annually.
Methodology & Accuracy
How this calculator is checked
CalculationTime pages are built around visible arithmetic: the formula, assumptions, worked example and practical limitations are shown so the result can be checked rather than simply trusted.
Formula used
Rent total sums monthly rent with annual increases. Buy total = down payment + (mortgage payment + taxes/insurance + maintenance) × comparison months. Cash gap = buy total − rent total.
Standard or basis
Standard or basis: transparent fixed-rate amortising loan arithmetic with monthly payments. The page does not claim APR disclosure compliance, tax treatment, lender approval, affordability assessment or local mortgage-product rules.
Where a calculator follows a named legal, trade or industry standard, that standard is cited visibly. Otherwise the page uses transparent general arithmetic and states its limits.Master's Tip
This first-pass comparison deliberately shows cash pressure before equity. A later deeper model can add resale, appreciation, tax and investment assumptions.
Related calculators
Questions
How do you calculate a mortgage payment?
Subtract the down payment from the home price to get the loan amount, convert the annual rate to a monthly rate, then apply the fixed-payment loan formula across the total number of monthly payments.
Does this include property tax and insurance?
The principal-and-interest payment is calculated separately. Optional monthly property tax and insurance fields are then added to show a fuller housing-cost estimate.
What happens if the interest rate is zero?
With a zero rate, the calculator divides the loan amount evenly by the number of monthly payments.
Is this the same as an APR calculation?
No. APR can include fees and disclosure rules. This page uses a simple fixed-rate loan payment formula and states what is excluded.
Why does the term length matter so much?
A longer term spreads the loan across more payments, which usually lowers the monthly payment but can increase total interest paid over the life of the loan.
Calculation note
Rent-versus-buy decisions mix a monthly budget question with a long-term asset question. This page starts with the cash-flow part because that is the easiest assumption to inspect.
Cash outflow is the first comparison
Before estimating appreciation or resale, users need to know how much cash each option requires over the same period.
Equity is intentionally outside this first pass
Keeping resale and equity out of the headline result makes the assumptions visible instead of hiding them in a single overconfident answer.