Rent vs Buy Calculator

This calculator helps you decide whether it's more cost-effective to rent or buy a home by comparing the total costs over a fixed period.

Calculator image
$

Enter your current or expected monthly rent.

%

Expected annual increase in rent.

$

Enter the purchase price of the home.

$

Enter the down payment amount.

%

Annual interest rate for the home loan.

%

Expected annual appreciation rate of the property.

years

Number of years for the loan repayment.

Breakeven Point (years)

N/A

Estimated time in years when renting equals the cost of buying.

Total Cost of Renting

N/A

Cumulative cost of renting over the loan tenure with annual increase.

Total Cost of Buying

N/A

Total effective cost of buying over the loan period.

How the Rent vs Buy Calculator Works

This calculator compares the total cost of buying a home versus renting over the same time period, factoring in appreciation, interest, and annual rent increases.

Formulas Used:

  • Total Cost of Buying: Home Price - Down Payment + Total Interest - Appreciation Gain
  • Total Interest: Home Loan × Interest Rate × Loan Tenure
  • Appreciation Gain: Home Price × (Appreciation Rate / 100) × Loan Tenure
  • Total Cost of Renting: Rent × ((1 + Rent Increase Rate) ^ Tenure - 1) / (Rent Increase Rate)
  • Breakeven Point: Point where cumulative rent equals total buying cost
  • Recommendation: Buy if Buying Cost < Renting Cost, else Rent

Example Calculation:

For a $300,000 home, 20% down, 5% interest, 30-year tenure, 3% property appreciation, $1,500 monthly rent, 2% rent increase annually:

Total Buy Cost ≈ $300,000 - $60,000 + $360,000 - $270,000 = $330,000

Total Rent Cost ≈ $1,500 × ((1 + 0.02) ^ 30 - 1) / 0.02 = ~$709,000

References: