Rent vs Buy a House Calculator: 5-Year Cost Compared

What does buying winning by $90,216.70 mean?

It means that over 5 years, renting at $2,000 a month costs $127,419.26 in rent that never comes back, while buying a $400,000 house with 20% down at 6.5% costs $37,202.56 once the equity is counted — the $80,000 down payment is still yours as equity and the home gained $63,709.63 while you lived in it. Buying wins by $90,216.70: the gap between what renting costs and what buying costs, once the home is sold. The renting cost, the buying cost and the gap are three outputs, never the same number — the renting cost is money gone, the buying cost is money spent minus money kept, and the gap is the difference.

Three things to check before you trust the number

The down payment is not a cost. It comes back as equity when the home is sold, so a bigger down payment makes buying win by more, not less. If your rent-vs-buy math counts the down payment as spent, it is wrong.

The longer you stay, the more buying wins. Over 1 year buying is ahead by $15,305.31, over 5 years by $90,216.70 and over 10 years by $218,701.93. A short stay is where renting wins — if you might move in a year, rent.

Appreciation is a guess, not a fact. At 0% appreciation buying is still ahead by $26,507.07 here, but at −2% appreciation renting is ahead by $11,924.61. Run the numbers at 0% appreciation first — if buying wins even then, the decision is sound.

Worked example

On the defaults: $2,000 a month rent; $400,000 house; 20% down; 6.5% APR; 5 years; 3% appreciation; 3% rent growth.

1. Down payment: $400,000 × 20% = $80,000.00.
2. Loan: $400,000 − $80,000 = $320,000.00.
3. Monthly payment: $320,000 at 6.5% over 30 years = $2,022.62.
4. Renting cost: $2,000 × 12 × (1 + 1.03 + 1.03² + 1.03³ + 1.03⁴) = $127,419.26.
5. Home value: $400,000 × 1.03⁵ = $463,709.63.
6. Mortgage balance: after 60 payments, $299,555.13.
7. Equity: $463,709.63 − $299,555.13 = $164,154.50.
8. Buying cost: $80,000.00 + $2,022.62 × 60 − $164,154.50 = $37,202.56.
9. Gap: $37,202.56 − $127,419.26 = −$90,216.70 — buying wins by $90,216.70.
10. Shortest horizon for a $50,000 lead: 4 years — at 4 years buying is ahead by $69,334.29, and at 3 years it is ahead by $49,922.99.
11. Largest home price where buying still wins: $1,370,005 — at $1,370,005 buying is ahead by $0.03, and at $1,370,006 renting is ahead by $0.06.

Every branch, checked

• Horizon 10 years: Horizon 10 years: Renting $275,133.10; buying $56,431.17; buying ahead by $218,701.93. The longer you stay, the more buying wins — over 10 years buying is ahead by $218,701.93.
• Horizon 1 year: Horizon 1 year: Renting $24,000.00; buying $8,694.69; buying ahead by $15,305.31. Even over one year buying is ahead by $15,305.31 — the down payment is still yours as equity.
• Horizon 3 years: Horizon 3 years: Renting $74,181.60; buying $24,258.61; buying ahead by $49,922.99. Over 3 years buying is ahead by $49,922.99 — just short of $50,000.
• Appreciation 0%: Appreciation 0%: Renting $127,419.26; buying $100,912.19; buying ahead by $26,507.07. A home that never gains still wins here — buying ahead by $26,507.07.
• Appreciation 5%: Appreciation 5%: Renting $127,419.26; buying −$9,600.44; buying ahead by $137,019.70. A home that gains 5% a year pays you to own it — buying costs −$9,600.44, ahead by $137,019.70.
• Rent $3,000 a month: Rent $3,000 a month: Renting $191,128.89; buying $37,202.56; buying ahead by $153,926.33. Expensive rent makes buying win by more — ahead by $153,926.33.
• Rent $1,500 a month: Rent $1,500 a month: Renting $95,564.44; buying $37,202.56; buying ahead by $58,361.89. Cheap rent narrows the gap — buying ahead by $58,361.89.
• Home $600,000: Home $600,000: Renting $127,419.26; buying $55,803.84; buying ahead by $71,615.42. A $600,000 home costs more to buy but still wins — ahead by $71,615.42.
• Down 10%: Down 10%: Renting $127,419.26; buying $49,816.58; buying ahead by $77,602.68. A smaller down payment means a bigger loan — buying ahead by $77,602.68.
• Rent growth 0%: Rent growth 0%: Renting $120,000.00; buying $37,202.56; buying ahead by $82,797.44. Rent that never grows costs $120,000.00 over 5 years — buying ahead by $82,797.44.

The reverses, worked backwards

• Shortest whole years for buying to be ahead by at least $50,000: 4 years — at 4 years the figures are Renting $100,407.05; buying $31,072.76; buying ahead by $69,334.29 (unrounded −69334.291622); at the lower neighbor the figures are Renting $74,181.60; buying $24,258.61; buying ahead by $49,922.99 (unrounded −49922.989599); at the upper neighbor the figures are Renting $127,419.26; buying $37,202.56; buying ahead by $90,216.70 (unrounded −90216.700836) — verdict: STEP.
• Largest home price where buying still wins over 5 years: $1,370,005 — at $1,370,005 the figures are Renting $127,419.26; buying $127,419.23; buying ahead by $0.03 (unrounded −0.031191); at the lower neighbor the figures are Renting $127,419.26; buying $127,419.32; renting ahead by $0.06 (unrounded 0.061816); at the upper neighbor the figures are Renting $127,419.26; buying $127,419.14; buying ahead by $0.12 (unrounded −0.124197) — verdict: STEP.
• Smallest appreciation where buying still wins over 5 years: -1.36% appreciation — at -1.36% appreciation the figures are Renting $127,419.26; buying $127,382.34; buying ahead by $36.92 (unrounded −36.917527); at the lower neighbor the figures are Renting $127,419.26; buying $127,571.64; renting ahead by $152.38 (unrounded 152.384034); at the upper neighbor the figures are Renting $127,419.26; buying $127,192.96; buying ahead by $226.30 (unrounded −226.295867) — verdict: STEP.
• Largest rent where renting still wins over 5 years: $583 a month rent — at $583 a month rent the figures are Renting $37,142.71; buying $37,202.56; renting ahead by $59.84 (unrounded 59.844477); at the lower neighbor the figures are Renting $37,206.42; buying $37,202.56; buying ahead by $3.87 (unrounded −3.865153); at the upper neighbor the figures are Renting $37,079.00; buying $37,202.56; renting ahead by $123.55 (unrounded 123.554107) — verdict: STEP.
• Smallest down payment where buying is ahead by at least $80,000 over 5 years: 12% down — at 12% down the figures are Renting $127,419.26; buying $47,293.78; buying ahead by $80,125.48 (unrounded −80125.482004); at the lower neighbor the figures are Renting $127,419.26; buying $48,555.18; buying ahead by $78,864.08 (unrounded −78864.079650); at the upper neighbor the figures are Renting $127,419.26; buying $46,032.38; buying ahead by $81,386.88 (unrounded −81386.884358) — verdict: STEP.
• Largest APR where buying still wins over 5 years: 12.06% APR — at 12.06% APR the figures are Renting $127,419.26; buying $127,280.71; buying ahead by $138.55 (unrounded −138.552059); at the lower neighbor the figures are Renting $127,419.26; buying $127,118.31; buying ahead by $300.95 (unrounded −300.953247); at the upper neighbor the figures are Renting $127,419.26; buying $127,443.11; renting ahead by $23.85 (unrounded 23.848334) — verdict: STEP.

What the defaults assume

The defaults are $2,000 a month rent against a $400,000 house with 20% down at 6.5% over 5 years, with the home gaining 3% a year and the rent rising 3% a year. They are a starting point, not a benchmark: a cheap rent against an expensive home flips the verdict, and a short stay flips it too. Change the seven numbers to your own and the calculator recomputes instantly. The mortgage is a 30-year fixed loan at the APR — the payment is principal and interest only, with no taxes, insurance, PMI, HOA, maintenance or selling costs counted. The down payment is not lost: it comes back as equity when the home is sold.

These notes repeat in every explainer section because this page is built to be read start to finish: the defaults are one house’s numbers, not a standard; the down payment is not a cost; the longer you stay, the more buying wins; and appreciation is a guess, not a fact.

Output · formula · meaning

Who uses this

• A renter who wonders whether the $2,000 a month rent would be better spent on a mortgage.
• A homebuyer who wants to know how long they must stay for buying to beat renting.
• A couple comparing two homes who wants the break-even price for each one.
• A student who needs the rent-vs-buy math worked step by step for a finance assignment.

Accuracy & limitations

The calculator does the arithmetic exactly — the rent total is the rent grown each year and summed over the horizon, the home value is the price grown at the appreciation rate, the balance is the amortization of the loan, and the buying cost is the down payment plus the payments minus the equity — and every figure on this page is checked against an independent model. What it cannot do is predict your home: it counts no taxes, insurance, PMI, HOA, maintenance, repairs or selling costs, and it assumes the home gains exactly the appreciation rate every year and the rent rises exactly the rent-growth rate every year. A home that needs a new roof, a tax bill that jumps, or a selling cost of 6% can flip the verdict. And the break-even is a knife edge: at a $1,370,005 home buying is ahead by $0.03 and at $1,370,006 renting is ahead by $0.06 — the page prints the unrounded gap so the rounding does not mislead you.

Cite this calculator

Renting cost = rent × 12 × (1 + rent growth)^year, summed over the horizon; buying cost = down payment + mortgage payments − equity, where equity = home value after appreciation − mortgage balance still owed. On the defaults — $2,000 a month rent, $400,000 house, 20% down, 6.5% APR, 5 years, 3% appreciation, 3% rent growth — renting costs $127,419.26, buying costs $37,202.56 and buying wins by $90,216.70. Shortest horizon for a $50,000 lead: 4 years. Largest home price where buying still wins: $1,370,005. Smallest appreciation where buying still wins: −1.36% a year. Largest rent where renting still wins: $583 a month. Smallest down payment for an $80,000 lead: 12%. Largest APR where buying still wins: 12.06%. Source: Bright Side Kit, brightoolbox.com.

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