Compare the total cost of renting against buying over your expected time in the home.
This calculator computes the true total cost of each path over your chosen horizon. Buying costs include mortgage payments, taxes, insurance, maintenance, closing costs and selling costs, offset by the equity you build and the home's appreciation. Renting costs include all rent payments plus the opportunity cost of the down payment — the investment return you forgo by not investing it. This opportunity cost is real money that most simplified comparisons ignore.
Net buying cost
Net Buying = (All mortgage payments + taxes + insurance + maintenance + closing costs) − Equity at sale
Net renting cost
Net Renting = Total rent paid + Opportunity cost of down payment
Opportunity cost
OC = (Down Payment + Closing Costs) × (1 + investment return)ⁿ − initial capital
This comparison model simplifies a complex decision. It excludes income tax effects, leverage risk, lifestyle factors and market volatility. Use it as a directional guide, not a definitive answer.
The down payment is capital that you could alternatively invest. By using it as a down payment you forgo those investment gains. This opportunity cost is one of the largest and most frequently omitted factors in rent vs. buy comparisons.
US large-cap equities have returned roughly 7% real (inflation-adjusted) annually over long horizons. A conservative assumption (5–6%) is appropriate for mixed portfolios. Using a high return (10%+) makes renting look better; using a low return makes buying look better. Try several scenarios.
It depends heavily on your horizon, local rent/price ratio, and how long you plan to stay. Shorter horizons (under 5 years) typically favour renting because buying costs are front-loaded. Longer horizons increasingly favour buying if home values keep up with or exceed inflation.
No. The deduction only applies if you itemize, and since the 2018 TCJA roughly doubled the standard deduction, fewer than 10% of filers now itemize. Including it would require knowing your marginal rate and deduction situation. For most buyers, the deduction's benefit is modest or zero.