Buy vs rent tool
What rent makes buy vs rent a tie?
Instead of guessing which is cheaper, this calculator solves for the monthly rent at which buy vs rent ends level at your horizon. Compare it with the rent you actually pay.
Example with default assumptions
After 10 years, buying finishes ahead of renting by about $41,686. On these assumptions buying overtakes renting after about 5.7 years, once selling costs are counted. The owner's first-month cash cost is $3,757, compared with $2,325 for the renter.
| Year | Home value | Mortgage balance | Buyer net worth | Renter net worth | Buying minus renting |
|---|---|---|---|---|---|
| 1 | $621,000 | $469,303 | $117,835 | $150,940 | −$33,105 |
| 2 | $642,735 | $458,120 | $149,966 | $176,418 | −$26,452 |
| 3 | $665,231 | $446,428 | $183,341 | $202,855 | −$19,514 |
| 4 | $688,514 | $434,203 | $218,008 | $230,289 | −$12,281 |
| 5 | $712,612 | $421,423 | $258,759 | $258,763 | −$4 |
| 10 | $846,359 | $348,248 | $460,065 | $418,379 | $41,686 |
Reading the equivalent rent
If your rent is higher than the equivalent rent, buying comes out ahead on your assumptions; if lower, renting and investing does. The gap between the two, in dollars a month, is a quick way to see how much room the decision has.
Why equivalent rent is not the monthly payment
The equivalent rent is lower than the monthly cost of owning because owners also build equity and benefit from price growth. It is a break-even in total wealth, not in monthly cash flow.
Questions people ask
How is equivalent rent calculated?
The tool re-runs the full buy vs rent simulation with different rents until the buyer’s and renter’s net worth match at your horizon.
Why does the answer change with the holding period?
Longer horizons give equity and price growth more time to work, so the rent that makes owning break even rises.
Does it include my investments?
Yes. The renter invests the down payment, closing costs and any monthly savings at the return you set.
Educational estimates based on your inputs; not advice. See the methodology and assumptions.