Buy vs rent tool
Price-to-rent ratio calculator for buy vs rent
The price-to-rent ratio compares what a home costs with what it would rent for. It is a quick first screen for buy vs rent, not a full answer. Use it to decide whether to run the detailed calculator.
Price-to-rent ratio and the 5% rule
The ratio is the home price divided by a year of rent. The 5% rule says the unrecoverable costs of owning (property tax, maintenance and the cost of tying up capital) are about 5% of the home’s value each year, so you compare 5% of the price, divided by 12, with the monthly rent.
This calculator builds those unrecoverable costs from your own inputs instead of fixed percentages, and shows the mortgage interest alternative for comparison.
Questions people ask
Is a high price-to-rent ratio bad for buyers?
A higher ratio means rent is cheap relative to price, which tends to favour renting unless prices rise quickly. It is a screen, not a verdict.
What does the 5% rule leave out?
It ignores price growth, rent growth, mortgage structure, selling costs and how long you stay. Use the full calculator for those.
Which cost of capital should I use?
Many people use the return they would earn investing the down payment, or the mortgage rate. The tool lets you change both.
Educational estimates based on your inputs; not advice. See the methodology and assumptions.